WEST PALM BEACH, FL (HEDGECO.NET) – As a result of declining opportunities in the equity markets due to declining volatility, many hedge fund managers are looking for alpha in the options market.Many of these managers are increasing their exposure in options derivatives trading, according to news reports. These opportunities were made possible by new improvements in liquidity and competitivepricing.
Hedge fund managers can implement a combination of strategies to make money in the options derivatives markets, even when the markets are trend-less. Greg Robin, chief options strategist with New York-based Rochdale Securities explained that hedge funds can profit from flat markets, even when the Standard & Poor’s 500 index and other major benchmarks are fairly flat.
Steve Braverman, managing director of Tahoe Advisers said, �The conventional strategies that hedge funds used to rely on to attract investors are no longer glamorous enough or generating the returns investors have come to expect�.
Hedge fund options trading has increased the volume of total option transactions. 2004 has become the busiest year for Options transactions since such business began in 1973. According to news reports, 962 million options derivatives transactions have traded in 2004 year-to-date. This volume is already higher than the 907.7 million transactions traded in the entire year of 2003.
Details of the 2004 options transactions show a record of 881 million of equity option transactions. In 2003 and 2002, such transactions stood at 830 million and 709 million respectively. Ed Boyle, Vice president of TD Options, an options specialist firm, said �”Globalization of the markets is bringing in new players every day. Technology is improving and the investment world is still looking to the derivatives industry for liquidity, leverage and enhanced returns.”
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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