Korea Exchange delays listing of individual-stock weekly options amid volatility concerns

Korea Exchange said Thursday it is postponing the listing of weekly options on four individual stocks — Samsung Electronics, SK Hynix, Hyundai Motor and LG Energy Solution.

The exchange had earlier planned to list the individual-stock weekly options on June 29 to meet diverse investor risk-management needs and enhance product variety in the capital market.

However, it decided to delay the launch after single-stock leveraged exchange-traded funds (ETFs) based on Samsung Electronics and SK Hynix — listed on May 27 — drew criticism for amplifying market volatility.

"Taking recent market conditions into account, we have decided to postpone the listing to ensure stable market operations and a smooth rollout of the products," the exchange said.

Weekly options are ultra-short-term derivative products with maturities that expire on a weekly basis. While weekly options tied to indexes such as the KOSPI 200 already trade on the domestic stock market, no weekly options based on individual stocks currently exist.

The domestic individual-stock options market also offers only monthly-expiry options covering 64 stocks, leaving a gap in short-dated products. That gap has been cited as a structural limitation of South Korea's covered-call ETF market.

More than 70 percent of covered-call ETFs listed in South Korea are based on US assets such as the S&P 500 and Nasdaq 100, and the lack of short-term options infrastructure for domestic use has long drawn criticism.

The introduction of weekly options would enable the development of covered-call ETFs based on large-cap domestic stocks such as Samsung Electronics and SK Hynix.

Concerns had also been raised that adding short-dated derivatives during periods of sharp market swings could concentrate hedging activity in specific stocks around expiry dates, amplifying volatility in the underlying share prices.

Analysts had particularly noted that, given the domestic market's tendency to concentrate trading flows in Samsung Electronics and SK Hynix, weekly options could become an additional source of volatility.

The exchange said it will reassess the timing of the launch after reviewing future market conditions and overall readiness.