Boom in Bespoke ETFs Drives Growth of Niche ‘A-La-Carte’ Options

When Matt Kaufman needs to include options in Calamos Investments’ defined-outcome ETFs, he turns to a type of bespoke equity derivative that lets him — rather than an exchange — set the terms of the contract.

These Flexible Exchange Options — also known as “Flex” — have existed since Cboe Global Markets Inc. introduced them in 1993 but only gained traction in recent years. The number of outstanding contracts has more than tripled since 2022, while the average daily volume has climbed 44% over the past year, according to data from Cboe.

Their popularity is largely tied to the blistering ...