Options Trading
Options trading is a type of investing that allows investors to take advantage of stock price movements without having to purchase the underlying stock. Options are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before a certain date. Options trading is a popular form of investing because it allows investors to leverage their investments and control a larger position with a smaller amount of money.
History of Options Trading
Options trading has been around for centuries, but it wasn’t until the 1970s that options trading became popular with individual investors. The Chicago Board Options Exchange (CBOE) was established in 1973, and it was the first exchange to offer standardized options contracts. Since then, options trading has become a popular form of investing, and it is now available to individual investors through online brokers.
Comparison of Options Trading
| Options Trading | Stock Trading |
|---|---|
| Leverage | No Leverage |
| Risk | High Risk |
| Cost | Low Cost |
| Timeframe | Long-term |
Summary
Options trading is a popular form of investing that allows investors to take advantage of stock price movements without having to purchase the underlying stock. Options trading has been around for centuries, but it wasn’t until the 1970s that options trading became popular with individual investors. Options trading offers investors leverage, high risk, low cost, and a long-term timeframe. For more information about options trading, investors can visit websites such as Investopedia, The Motley Fool, and The Options Industry Council.
See Also
- Call Option
- Put Option
- Option Chain
- Option Premium
- Option Strike Price
- Option Expiration Date
- Option Greeks
- Option Spread
- Option Straddle
- Option Collar
