As the first exchange in Europe, the weekly index options were introduced by Euronext Liffe Amsterdam in 2006. Two years later the famous daily index options followed in 2008. Still a very successful product with good volumes. Unfortunately for Euronext most flow is executed on TOM these days.
After another two years the weekly options on the major stocks (RD, ING, Mittal etc) came to life in 2010. Pretty boring, not much volume. Transaction costs for retail investors are blocking healthy trading in these weekly’s.
Lifetime of two weeks
Next week new weekly options will be added in the index and single stocks. The lifetime will be extended to two weeks. Options with maturity of two weeks will be introduced as from October 25th (source). This means usually there will be expiration for three fridays in a row (also including regular monthly options). Of course, TOM follows Liffe.
With DeGiro weekly stock options suddenly make sense
As you may remember – there’s a new contender in the broker market. DeGiro will only charge 85 cent per option contract, making it worthwhile to trade weekly stock options. You have got to be a little patient, as DeGiro is only adding weekly options to their product list this week. Daily options will follow next week.
DeGiro still has the looks of a “Rumanian version of a Lidl supermarket“, with difficult navigation and a clumsy helpdesk – but we should give them some time. They’re running a low cost operation using the ABN AMRO Clearing network and memberships, and relatively low tech. No inhouse matching, involvement of HIQ or smart order routing – just straight execution.
I’ve been told TOM and DeGiro aren’t negotiating yet. I’m a big fan of fierce price competition. Hope DeGiro will get their stuff running. Good for the weekly options.
The liquidity provider licenses used to be a closed shop at NYSE Liffe. Once a firm was “primary market maker”, quoting all available options in a certain class, they usually could hold on their quoting position forever. These quoting licenses were limited, usually only 3 for smaller stocks to around 5 for the bigger ones as ING and RD. An interesting consequence were the traditional yearly play off for the licenses, like this one early 2013.
