Options contracts are used by traders to both protect themselves against big swings in the price of shares and to speculate on the direction of price moves, and when markets get quiet there is less reason to trade. Not so this year.

Average daily trading volume in listed options for the first five months of 2017 was higher than in the comparable periods in the prior two years, a Reuters analysis of data from equity derivatives clearing house OCC showed.

"Volumes are holding pretty steady compared to the last few years, despite the lack of volatility in the marketplace," said Tom Lehrkinder, senior analyst at consultancy TABB Group.

Average daily trading volume in the first five months this year stood at 16.5 million contracts, compared with 16.4 million and 15.9 million contracts for the same periods in 2016 and 2015, respectively.

This at a time when daily moves in the benchmark S&P 500 is extremely muted. The S&P 500 index's <.SPX> five-month rolling close-to-close volatility in mid-May hit a 21-1/2 year low of 6.42 before ending the month at 6.98.

The CBOE Volatility Index <.VIX>, a barometer of expected near-term stock moves, has averaged 11.8 for the January-May period, the lowest ever for any comparable period.

"To have volume be either flat to up in a very low volatility environment is kind of a big deal," said Henry Schwartz, president at options analytics firm Trade Alert in New York.

(To view a graphic on 'U.S. Options Trading Volume & Volatility' http://reut.rs/2rNZ3Bd)

Donald Trump's victory in the U.S. election in November, which set off a surge in stock prices, had a big role to play in boosting options trading volumes, analysts said.

Investors who might have been caught off guard by the post-election rally have turned to the options market as a leveraged way to play catch-up.

"People are looking for alpha wherever they can find it," said Lehrkinder, referring to investment returns above benchmark results.

The sharp drop in stock correlations - a measure of how much stocks move in tandem - as investors picked winners and losers under the Trump administration, also helped boost single stock options volume, Trade Alert's Schwartz said.

Single stock options made up about 49.1 percent of overall trading volume, up from 47.9 percent last year, according to Trade Alert data.

(Reporting by Saqib Iqbal Ahmed; Editing by Nick Zieminski)

By Saqib Iqbal Ahmed