History of the options trading
An option contract is a contract between two parties where one part has a
right and other part has an obligation to buy or sell an underlying security at
a specified price within a specified time frame.
The options have started to trade in 19th century, basically at the same time
when stock started to trade. However, at that time options buyers had to find
options sellers through advertising in newspapers.
1848 is considered an official year when options contracts started to trade in
North America. During this year, the Chicago Board of Trade (CBOT) was founded
with the first president Thomas Dyer.
The Kansas City Board of Trade, the Minneapolis Grain Exchange and the New York
Cotton Exchange started to trade later.
By the middle of the 20th century the options was not a very popular trading
vehicle. The annual total trading volume was still below 300,000 options
contracts by 1968. It was mainly due to the low liquidity of the options.
Changes came with the opening of the Chicago Board of Options Exchange (CBOE) in
1968. Basically it was the first U.S. options exchange and within several years
the daily trading volume increased from 911 options contracts (on April 26,
1968, the fist day of trading) to more then 200,000 options contacts per day in
the 1970's. This increase in trading volume was mainly caused by speculators
that were attracted by the grooving liquidity of the options.
At that time only call options were available for investments, however on 1977
the put options started to trade on the CBOE by giving the ability to
speculators to participate not just in Bull but Bear markets as well. That was
additional force that started to attract more and more investors into the
By 1983 the options contracts were mainly offered on stocks. The first options
on the indexes were launched in 1983. The S&P 100 (OEX) index options started to
trade on CBOE on March 11, 1983. The S&P 500 (SPX) index options started to
trade on CBOE on July 1, 1983.
With growing popularity of the options investing, the other exchanges started to
trade options as well. In 1985 the NYSE (New York Stock Exchange) and the NASDAQ
Stock Exchange started to trade equity options contracts.
At the current time the options trading is one of the most popular trading
vehicles that is available on the market. High liquidity, great leverage, no
margin requirements (except for uncovered options trading), wide range of the
options on equities, indexes, futures and currencies attract more and more
speculators. The development of the hi-tech has brought options trading to a new
level. Now, real-time options quotes, options news, charts and indicators can be
delivered directly to the trader's desk and are available not just for
institutional professional investors, but for retail traders as well. Never the
less, the options trading remains to be an extremely high risky type of investment.
One single winning trade
could pay for the membership for years to come.
: THIS INFORMATION IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE ANY FINANCIAL ADVICE. RISK IS INVOLVED IN ALL STYLES OF MONEY MANAGEMENT. Uncovered options trading involves greater risk than stock trading. You absolutely must make your own decisions before acting on any information obtained from this Website.
The return results represented on the web site are based on the premium received for the selling options short
and do not reflect margin. It is recommended to contact your broker about margin requirements on uncovered options trading before using any information on this web site.
Use our "Trade Calculator
" to recalculate our past performance in relation to the margin requirements, brokerage commissions and other trading related expenses. Past performance is not indicative of future results.