This dissertation attempts a contribution toward a much-needed holistic understanding surrounding the trading dynamics of exchange-based... Show moreThis dissertation attempts a contribution toward a much-needed holistic understanding surrounding the trading dynamics of exchange-based derivative products. The latter proxying such products’ commercial performance. Hence, upon identifying the lack of a measurement standard as the underlying reason for the attested and motivating knowledge deficit, we adopt a two-step approach for the development thereof: At first an integrated conceptual framework is established and, subsequently, a normalization standard is derived. In result, across-product trading dynamics are rendered directly comparable; arguably, for the first time ever. Furthermore, we also explore the existing postulation of balanced liquidity commitments between the groups of hedgers and speculators and posit the construct of a corresponding temporarily stable equilibrium. The latter serves as the first dimension on which the developed measurement standard may be applied. Accordingly, we conduct empirical research predicated on an extensive dataset with daily trading activity and, just as theorized, reject the hypothesis that the aforementioned speculator-hedger ratio is non-stationary. We then proceed in studying the trading dynamics of individual derivatives, implementing the developed standard by means of longitudinal analyses for second time. To a large extent our results do not contradict the body of related literature, which however has been essentially based on heuristic approaches to this time. Nevertheless, in its course, this study also highlights the need to shift the entire paradigm of studying individual derivatives trading success – from a single-faceted – to two separate effects: one anchored to the short term ‘steam gathering’ capacity of newly launched products and another associated with the notion of established products’ longevity. Altogether then, this study aspires to serve as a solid first step in systematically answering Webb’s (2018) call to confront the still unknown causes of derivatives’ success, or lack thereof. Show less
