Where's the Action?

Futures Options are less frequently traded than Equity Options. So, where's the action?

Pit:

Electronic:
These charts show the total volume traded during the month of July on the front 3 months of option contracts. I intentionally left Eurodollars off the pit traded chart as it had a total of nearly 1M contracts.

Of course, volume alone doesn't make a contract worthwhile to trade. Margin requirements, commissions, tight spreads, and the strike density all contribute to the "tradeability" of a contract.

A good example of the importance of strike density is @TY (the 3rd most active electronic contract). On a "big day", @TY will typically cross a whopping 1/2 of a strike. @ES, on the other hand, will cross 3-4. The more strikes crossed, the easier it is to adjust a position.

Commissions can dramatically change the results. The best pit traded commissions I've seen so far are $7 each way through RJ O'Brien. @ES contracts are $1.65 each way through IB. Adjusted for equivalent risk, you may have to trade 10 Corn contracts for every 2 @ES contracts. This means paying $70 in commissions vs $3.30.

Commissions inclusive, on an equivalent risk-adjusted basis, some pit-traded options have historically offered much better reward than most electronic contracts.