Stock options trading has skyrocketed 31 percent this year to an annual record, lifting the fortunes of the firms in Chicago that specialize in them.
Chief among them is Citadel Securities, which handles about a third of all options orders, though other Chicago players like Wolverine Trading, Old Mission, Simplex Investments and Dash Financial Technologies have also benefited.
Chicago firms providing similar execution services for larger institutional clients, such as Dash, also gained, thanks partly to the pandemic shutting down floor trading and shifting more such orders to electronic venues, says Dash co-Chief Operating Officer Stino Milito. “This is no doubt our best year ever,” he says.
That’s true for Chicago proprietary trading firms that specialize in equity options too, he suspects. Those private firms don’t have clients, but they trade in the markets for their owners, using strategies to take advantage of pricing discrepancies and grab profits. “It hasn’t been the easiest environment for a lot of the (proprietary) firms for a while,” Milito says. “This is definitely their best year in many, many years for many that I talk to.”
Prop shops like Simplex, Chicago Trading, Old Mission and Akuna Capital, as well as Chicago arms of Dutch firms Optiver and IMC, all stood to gain from the big options trading this year. Optiver and Akuna have been hiring a lot lately, says Richard Excell, a former Wolverine executive who now teaches on the topic at the University of Illinois at Urbana-Champaign.
Old Mission and Simplex say increased profits allowed them to expand their operations this year. Old Mission is quadrupling the size of its office as it moves to a new Loop location. Simplex is adding 40 percent more square footage in moving to a new floor in its 230 S. LaSalle St. building.
As such firms expand, they’re able to aim their trading tools at a bigger swath of the options market or delve into new financial markets. Meanwhile, Chicago peers focused on futures trading, like DRW Trading, have faced a double-digit downturn in interest rate futures trading volume compared to last year.
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