by Zubin Ramdarshan, Head of Equity & Index Product Design, Eurex
In May, cryptos dominated the headlines again, drawing the market participants' attention towards the digital asset class as its volatility increasingly transfers over to traditional equity markets. There is some rationale behind this; specific U.S. tech heavyweights are now invested in bitcoin, leading to a more direct link. There is also the impact of tweets by one particular executive that seem to presage significant moves, keeping traders alert. Despite the volatility burst, equity markets have remained relatively well supported. However, there is a growing feeling of unease that markets are reaching an inflection point.
Looking at the data, it's not surprising to see high activity in VSTOXX® Futures and Options in early to mid-May. Implied volatility spiked up several points, resulting in volume increases more than double that of the same month last year. The Banks index, which was trading at a spot level of circa 50 only as recently as October, has rebounded strongly and currently touches 100. This exceptional recovery attracted larger bets on both the EURO STOXX® Banks Options and Banks Dividend Futures. Basic Resources and Oil & Gas Sector Futures and Options also recorded large volume increases versus May 2020 while the benchmark EURO STOXX 50® Weekly Options were active as well, alongside the EURO STOXX 50® Index Dividend futures and options. And, our growing ESG derivatives segment experienced another busy period. The STOXX® Europe 600 ESG-X Options open interest overtook the respective futures, representing quite an impressive statistic of almost EUR 2bn notional.
Staying on the ESG theme, on the last day of May, Eurex launched a range of new MSCI Index futures and options. Of particular interest will be the new MSCI ESG Enhanced Focus Index Futures, which were introduced for five regions: World, USA, EM, Europe and Japan. In addition, we listed the MSCI China Tech 100 Index Futures and futures and options on the MSCI Hong Kong and MSCI China Hong Kong Listed Large Cap indexes, addressing the gap in product solutions for HK regional index benchmarks.
Facts & figures
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