Courtesy of Goldman Sachs, the below chart shows the stunning surge in single name stock option volume as a percent of the underlying normal share volume totaling a record 91%. Since 2006 the closest second place finisher for this percentage has been in the low 60% range back in 2012.
I can tell you from my day to day trading that the vast percentage of this activity has been on the call option side. Perhaps people are replacing (and taking profits) in the underlying equity and replacing their exposure with more defined risk (i.e. premium paid) call options. This would jive with the flow of funds information in mutual funds and ETF’s that shows record outflows from stocks and massive inflows to fixed income proxies of all sorts. Meanwhile stocks just keep levitating higher without a care in the world. Somehow, I feel this cannot end well.