Continue reading...Since the introduction of exchange traded options in the 1973, they have become more and more popular. In fact, it seems that almost every month I get an email from the Chicago Board of Options Exchange (CBOE) announcing that a new record number of contracts have traded and showing the month to month and year to year increase in options trading.
What accounts for this increase in options volume? Well, while banks and other institutions have been using exchange traded and over-the-counter options for many years, the general public is beginning to recognize that options don’t have to be as risky as their reputation may imply. In fact, they can be used in many conservative ways to hedge a portfolio, provide portfolio insurance, generate a regular income, and reduce overall market exposure and risk. It is their flexibility and ability to make money in all types (bull, bear, trending, sideways, etc.) of markets that is adding to their popularity.
And, as if that’s not enough, there are...
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