When cash markets are crashing down in ruins, a few products seem to thrive on the havoc. Equity derivatives were one of the financial markets’ big winners of 2008, as players of all kinds used them to reposition. Market participants are gung-ho about 2009, too – but as Vishala Sri-Pathma discovers, January’s slump in trading shows it is certain to be a bumpy ride.
In the last, horrendous year for financial markets, investors have scrambled to adjust to changing conditions, protect themselves, find ways to make money.
In this turmoil, large numbers of them turned to equity derivatives. Where other markets suffered an exodus of participants, this product attracted new players.
So much so that equity-related instruments accounted for all the global exchange-traded derivatives industry’s growth, swelling by 23% to help the entire market grow by 15%.
Single stock futures and options jumped by 29%...