Traders Magazine
By James Chu, Stefanos Bazinas, and Choey Li, NYSE
At the end of January, stock market news was everywhere from mainstream outlets to Saturday Night Live, as social media seemed to drive unprecedented trading interest in a few stocks. AMC Entertainment (AMC), BlackBerry (BB), GameStop (GME), and Nokia (NOK) received the most attention and saw their combined options ADV increase from 68K contracts in Q4 2020 to over 426K contracts in Q1 2021 − a 523% increase. Overall multi-list options ADV increased 31.3% in that same time frame.
ADV Growth in Retail Focus Symbols
Market Quality
Increased volatility and uncertainty can adversely impact market quality, but in these 4 symbols, market quality metrics largely improved. Options bid-ask spreads in the combined 4 symbols tightened by 45% from 765 bps to 421 bps quarter-over-quarter (QoQ). The rise in participation and attention also led to a 303% QoQ increase in posted liquidity from $21.6K to $87.1K of market value displayed. Thus far in April, spread widths have further improved, while posted liquidity has declined, but remains double its Q4 levels.