The Synergistic Impact of AI-Driven Strategies on Retail Options Trading within the European Derivatives Market: A Comparative Analysis of Liquidity and Market Efficiency

Abstract

This study analyzes the synergistic impact of AI-driven strategies on retail
options trading in the European derivatives market through comparative
analysis of market efficiency and liquidity compared to the US setting. This
study employs the mixed-methods approach, and we analyze quantitative datadaily
trades volume, bid-ask spread, and volatility indices (VIX/VSTOXX)-as
provided by EUREX, CBOE, CME, and Bloomberg, and qualitative data sourced
from industry and scholarly publications. The findings indicate that US markets,
characterized by more liquid pools of liquidity (average daily SPX contracts of
1.2 million vs. 300,000 SX5E contracts) and narrower spreads (0.25% vs. 0.40%),
enable AI algorithms to calculate more economically than in Europe (CBOE
Global Markets, 2024; EUREX, 2024). Further, AI technologies improve price
discovery chartered by a rise in options volume of 18% vs. 9% after CPI
announcement (Bloomberg, 2024)-and minimize behavioral biases among retail
traders. However, structural fragmentation and lower AI take-up in Europe
constrain these benefits (Acuiti, 2023). We conclude that AI enhances liquidity
exploitation and efficiency on both sides of the Atlantic, but that market structure
is once again a significant moderator. We suggest additional research on modelspecific
performance, sectoral research, stress system risk, and coverage to
emerging markets.