Hi, Would anyone be kind enough to elighten me why KOSPI 200 options are the most liquid ones in the world? I mean, what is so attractive? Or do they have a special deal going there....trade 10,000 option contracts and you get a car or something? Cheers.
I know part of the story is the margin rules for futures makes it more capital efficient to trade options, to a greater extent than with other contracts. Of course that doesn't account for all of the massive volume. Anyone else have any ideas?
Hmm, 58 views and only one answer.....Either no one actually knows the reason or the ones that do don't wanna disclose it....I knew it....it that car deal!
I've asked around and many US exchange people contend its cultural. Local traders buying far OTMs, gambling on hitting a home run. Haven't seen OTM vs. nearby/ATM volumes to verify, though.
Yes, definitely the "Keno" gambling mentality. In fact, margins on short KOSPI options aren't very cheap.
The otm strikes are doing up to a million contracts each every day, 1 cent spread. They don't go far otm as other markets though. The index was at 165 and the furthest call otm strike was 175, even when the index rallied to 170.
As with everything else its going to take some watching to determine workable trading strategies. I plan to look at a trend (micro) based day trading strategy using 1 or 2 strikes OTM and see how it performs. No stops I suspect and maybe some scaling in. Hold overnight would seem to have the potential to be relatively low risk. This could all be silly of course but I won't know until I put some numbers down and test it.
Don't forget that it trades in 0.05 increments so 175 to 170 is still 100 ticks (correct me if I'm wrong).
What timezone are you all in? London is the worst for this, it opens at 12pm and closes at 7am. I have got jetlag looking at this market!