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Options Trading Short History

By: Viktor Ka

The options trading began in 19th century, almost at the same time when stock started to trade. However, newspapers advertising should be used at that time in order for options buyers to find options sellers. Options trading was not popular at that time.
Officially an options trading began in1848 when Chicago Board of Trade (CBOT - http://www.cbot.com/) was founded and options contracts started to trade in North America. The first president of the Chicago Board of Trade (CBOT) was Thomas Dyer. Later other exchanges started to trade options and the Kansas City Board of Trade, the Minneapolis Grain Exchange and the New York Cotton Exchange started to trade options contracts.
Still, the options trading was not a popular way of investing into the market. By the middle of the 20th century the annual total trading volume was below 300,000 options contracts. The main reason why options were not a popular trading vehicle was because of the low options liquidity.
Big changes came when in 1968 Chicago Board of Options Exchange (CBOE - http://www.cboe.com/) was opened for options trading. At that time, basically it was the first U.S. exchange for options trading only. In a few years only daily trading volume jumped from 911 contracts (on April 26, 1968, the fist day of trading on CBOE) to more than 200,000 options contacts per day in the 1970’s (on CBOE). The growing liquidity of the options attracted the speculators and this increase in the options daily trading volume was basically caused by them.
Another increase in the options trading popularity happened when in 1977 option puts started to trade on the CBOE. By that time the investors may consider only call options trading. The ability to use options trading in both Bull and Bear markets attracted a new wave of speculators.
Still, the options contract was issued for stocks only. It was by 1983 when the first options contracts on indexes started to trade on CBOE. On March 11, 1983 the S&P 100 (OEX) index options and on July 1, 1983 the S&P 500 (SPX) index options started to trade on CBOE. The new ability of investing into the index options increased the popularity of the options trading.
High popularity of the options trading has encouraged other stock exchanges to start trading options contracts as well. In 1985 the NYSE and the NASDAQ started to trade equity options contracts.
The options trading has become one of the most popular types of investments. The main reasons that attracted the wide range of the investors are high liquidity and great leverage. A wide range of the options are available on the market now. Investors may consider options on equities, indexes, futures and currencies. Still, the options’ trading is considered one of the extremely high risky types of investment where a trader may lose all invested capital.

Article Source: http://articlekarma.com

For more information visit QQQQ and SPY Options Trading Signals to see trading systems based on MV technical analysis.

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