TY - JOUR T1 - Convergence of the U.S. Options and Equities Markets: <em>Is the Party Over, or Just Getting Started?</em> JF - The Journal of Trading SP - 56 LP - 67 DO - 10.3905/JOT.2009.4.1.056 VL - 4 IS - 1 AU - Justin Schack AU - Joseph Gawronski Y1 - 2008/12/31 UR - https://pm-research.com/content/4/1/56.abstract N2 - For much of its brief history the U.S. listed options market has been an opaque, protected club of sorts, where dealers and exchanges often cooperated to promote the industry and enjoyed fat profits that were largely insulated from aggressive competition. Now the market is in the midst of a transformation that we believe will make it look more like its agewizened, slower-growth, lower-margin uncle: the cash equities market.One source of this convergence is the increased adoption of options trading by institutional investors, including traditional, long-only asset managers that historically have shied away from derivatives as too risky. These firms are writing covered calls, as well as launching so-called 130/30 shortextension portfolios and other strategies that use options to protect their long positions and boost returns. They join hedge funds and proprietary trading outfits that have been steadily embracing the merits of multi-asset-class trading, often as part of complex arbitrage strategies. As a result of this heightened interest and increased financial-market volatility in recent years, U.S. listed options volume is growing by leaps and bounds. TOPICS: Exchanges/markets/clearinghouses, options, portfolio construction ER -