The institutional world as a whole really only looks at the SPX because it's market weighted (unlike the YM) more diverse (than the NQ) and represents the "equity" world better as it has more stocks. However, it's not too many stocks (unlike nasdaq CCMP and NYSE NYX) and the stocks included are all liquid. Most institutions really trade the SPX options. 217,000 ES options traded today (at $50/point) vs 450,000 SPX options (at $100/point).
Thanks for your reply. I am of course aware that SPX is the most liquid index option game in town, but since I'm presently restricting my interests to CME, I'm left with ES. I am kinda surprised NQ options don't do more volume because the underlying has a lot of vola to perhaps find some edge with and I think it probably represents just as good of a candidate for the sort of desk that might want to do basically a dispersion trade or lead/lag on the first few principle components vs the index compared to the S&P. I appreciate your words on this. Obviously everyone who's big plays the SPX, but I'm surprised other indices don't have more going on. Are the respective DIA/QQQ option markets vs SPY/X consistent with the drop off in volume from ES to YM/NQ I'm seeing on CME?
DIA (the etf) has liquidity similar to a decent single stock. Never saw anyone trade an INDU option. For some reason, everyone trades the QQQ's for nasdaq exposure. Never understood why.