My MLM Dream Team

Options trading has been available for almost 35 years, but has not become popular since about 10 years ago. During that period the total number of options contracts traded on U.S. exchanges increased by more than 600%. Why has options trading become so popular?

One major factor is that options are now understood better than they previously were. In the early days many investors and brokers had bad experiences with options, usually because they didn’t properly understand them.

The influence of the internet has also been a significant factor. Not only has the internet provided the means for low cost options trading, but it has been a tremendous source of valuable information.

This has served to demystify the options trading process to a great degree. Prospective options traders can draw on the experience and advice of countless numbers of people who have successfully engaged in trading, learned its ins and outs, and developed a sophisticated understanding of the activity.

It has also become clear that the degree of risk associated with options trading is dependent on the types of contracts a trader gets himself involved with. There are some types of options that actually can reduce risk – relative to normal stock trading at least. For example, a basic put option can be used as a hedge against large declines in a stock’s market value. Used wisely this technique can reduced the risk of significant loss in such a situation.