2015 NYMEX Energy Options Year End Review

January 2016

Jeff White – Senior Director, Energy Products

© 2015 CME Group. All rights reserved. 2

Energy Market Landscape: 2015 Overview Trends

• A major decline in oil prices stimulated crude and refined volume

• 2015 saw major growth in energy options electronification

• New products and electronic trading functionality

© 2015 CME Group. All rights reserved. 3

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Energy Market Landscape: 2015 Overview WTI’s 2015 Volatility and Decline

March January

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December

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Energy Market Landscape: 2015 Overview WTI’s 2015 Volatility and Volume and O.I. in Futures and Options

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NYMEX Energy Options – Total Volume and Electronic Percentage

MTD ADV % Electronic

Energy Market Landscape: 2015 Overview 49% of NYMEX Energy Options Traded Electronically in December, an increase of 24% throughout 2015

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NYMEX WTI Options (LO) Electronic Volume and Percentage

Elec MTD ADV % Electronic

Energy Market Landscape: Crude Oil A Record 77% of WTI Options Traded Electronically in December, a 20% Increase Since the Beginning of 2015

© 2015 CME Group. All rights reserved. 7

Butteflies 16%

Custom 10%

Diagonal 3%

Horizontal 2%

Other 2%

Risk Reversals 8%

Straddles 5%

Strangle 3%

Vertical 51%

Crude Oil Spread Type

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NYMEX Crude Options - Electronic Spread Volume

Spread ADV % Spread

Energy Market Landscape: Crude Oil 33% of Electronically Traded WTI Options were Executed as a Spread in December

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Energy Market Landscape: Crude Oil Crude Oil Calendar Spread Options Achieved Record Volume and Open Interest in 2015

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WTI 1 Month CSO (WA + 7A)

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Energy Market Landscape: Crude Oil Weekly Options Provide Flexibility to Manage Volatility Around High Impact Economic Events

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Crude Oil Weekly Options - Average Daily Volume and Open Interest by Days to Expiry

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Crude Oil Weekly Options - ADV and Max OI by Month Since Launch

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NYMEX Natural Gas Options (LNE + ON) - Electronic Volume and Percentage

Elec MTD ADV % Electronic

Energy Market Landscape: Natural Gas Over 21% of Nat Gas Options Traded on Screen in Dec., a Record

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• 9,714 contracts/day of Financial Natural Gas Options (LN) traded on screen in December, a Record

• Over 21% of Natural Gas Options (LN + ON) traded electronically

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Energy Market Landscape: Natural Gas Record Electronic Volume in Benchmark Financial Nat Gas Options

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Butteflies 32%

Custom 6%

Diagonal 1% Horizontal

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Other 7%

Risk Reversals 8%

Straddles 2%

Strangle 3%

Vertical 40%

Natural Gas Spread Type

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NYMEX Nat Gas - Electronic Spread Volume

Spread ADV % Spread

Energy Market Landscape: Natural Gas Electronic Spread Volume >10,000 Lots/Day in Dec., a RECORD

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New Products: Crude Oil Brent Crude Oil (Futures-Style Margin) Options (BZO) Began Trading in December

BZO Specs

• Plain vanilla monthly option

• American-Style option

• Futures-style Margin

• Exercises into BZ futures

BZO is CME’s First Option with Futures-Style Margin

• Futures-style margined options premium is not paid until exercise or expiration

• Margining style matches the prevailing Brent market convention

www.cmegroup.com/trading/energy/crude-oil/futures-style-brent-crude-oil-options.html

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New Products: Crude Oil NEW: Louisiana Light-Sweet Crude Oil Options Launched in Sept.

• The LLS market has been expanding in recent years, and has become a major benchmark for seaborne crude

• Three new Louisiana Light Sweet (LLS) Average Price Options launched Sept.14

• LLS (Argus) Crude Oil APO (XAO)

• LLS (Argus) vs. WTI Crude Oil APO (WJO)

• LLS (Argus) vs. Brent Crude Oil APO (LRO)

• All LLS options are European-style and financially settled

© 2015 CME Group. All rights reserved.

Summary of Highlights Recapping a Record Breaking Year

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Crude Oil

77% of WTI Options Traded Electronically in December, a 20% Increase Since the Beginning of 2015

Record Breaking CSO Volume, >16,600 contracts/day

NEW: Brent (Futures-Style Margin) Option (BZO) trading is strong

Natural Gas

~10,000 contracts/day of Financial Natural Gas Options (LN) traded on screen in December

Over 21% of Natural Gas Options (LN + ON) Traded Electronically in December

Over 10,000 Electronic Spreads were Sent Per Day in Natural Gas in December