Asset Outlook: How the Options Market is Evolving

Nasdaq’s Kevin Kennedy, SVP and Head of U.S. Options, and Greg Ferrari, Managing Director, describe the evolution taking place in the options market and how Nasdaq is using its FinTech background, execution culture, intellectual capability, and machine intelligence to help grow and modernize market structure.

Traditionally, options have played second fiddle to equities, but we see the options industry, after a long, stagnated period of low interest rates and low economic growth, to be on the cusp of something big. With their ability to reduce risk and enhance yield, options are the current focus of many investors. To capitalize on the options trend appearing in the market, Nasdaq is leveraging our FinTech prowess in order to grow and modernize the currently evolving market structure.

Consider the next sector of growth. Is it IRAs, bringing in assets for the baby boomer generation? Maybe, it’s Millennials, beginning to consume data and enter the asset class. Or possibly, it’s Europeans, increasingly using the listed options market. The sectors for advancement are endless, and we believe that Nasdaq is at the forefront of discovering which ones need to be explored.

Once specific sectors have been identified, we can work to enhance the investment process for our clients. For years, Nasdaq has been collecting vast amounts of data in the options space while also investing time and money into machine intelligence. We are also working to understand our end-user clients and why they may or may not be using the asset class. By understanding our user base and streamlining data through machine intelligence, we can present a toolkit of information to our clients in an efficient and innovative way—enabling them to better manage their risk through access to the data points that drive an informed investment decision.

Nasdaq is the leader in multi-listed equity options and with this prominent position comes great responsibility. To continue revolutionizing the industry and encouraging others to do the same, we are working with peer exchanges and the SEC to modernize the market structure. As the economy continues to grow, as interest rates rise and volatility returns, we are poised to make positive change.

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For more information on Nasdaq-listed options, please contact sales@nasdaq.com.

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