Stock Market Options Trading

113: The Life Cycle of an Options Trade

9 snips
Mar 28, 2024
Mat Cashman, Principal of Investor Education at OCC, discusses the life cycle of options trades, evolution of options trading from floor to electronic marketplace, changing SPX options increments, intricate journey of options trades, Delta neutrality, market maker strategies, market trends, and trade structuring.
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ANECDOTE

From Pit Trader To OCC Educator

  • Matt Cashman started trading options in 1999 and worked on the CBOE floor before moving to electronic markets.
  • He now leverages that experience as Principal of Investor Education at the OCC to teach options mechanics and market structure.
INSIGHT

Electronic Trading Multiplied Volume

  • The biggest market change has been the shift from pit trading to electronic and algorithmic trading.
  • That shift multiplied trade volume and cleared contracts massively, from a few billion to ~11–12 billion annually.
INSIGHT

Zero-DTE Is Part Of An Option's Life

  • Weekly and then daily expirations evolved gradually starting in 2005, not suddenly in one year.
  • Every option eventually becomes a zero-DTE option on its last day, so zero-DTE is part of normal option lifecycle.
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