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| | | Why is options so popular? | | The popularity of options trading has skyrocketed over the last couple of years. Now, many people enter options trading as a way to start out in investing. Options Trading is a type of trading, in which an investor obtains a contract called an option. An option gives the buyer a right, not an obligation, to buy or sell an asset at a certain price by a certain date. | | Options trading is a good way to make money without making a decades-long commitment to buying company stocks. With the rise of do-it-yourself investing platforms, everyone can now invest into options and they do. The growing demand for options can be credited to greater accessibility and awareness of the benefits they bring. | | Options allows investors to use investing tools to bet on the future price direction of stocks at a much smaller outlay. They can pay a premium to secure the option or they can sell the investment to another investor for a quick profit. | | Options hit a record year | | According to data, 2021 has been a huge year for options trading. According to data from the owner of the Chicago Board Options Exchange and BATS Global Markets indicates that nine of 10 of the most active call options trading days in history have occurred this year. Data from the Options Clearing Corporation also found that a record 39 million options contracts have changed hands on an average day in 2021. This is a 31% increase from 2020 and its is also the highest amount ever recorded since options trading first started back in 1973. | | In fact, options trading has become so popular that the current value of these contracts in circulation has surpassed that of stocks. Options traders have shown significant interest in big tech companies, like Apple (AAPL) and Tesla (TSLA). | | What these numbers mean for investors | | While it's great to watch investors thrive, the options market popularity does create growing concerns. A common worry is that the short-term benefits of options can create greater volatility in stock markets. According to the Wall Street Journal, we have already seen an example of this played out in the Gamestop (GME) saga. The rapid rise in Gamestop's share price was triggered in part by lots of call options being made on the stock. | | Another main concern is that success stories about options investments will prompt people to jump on a bandwagon, so to speak, and start investing without fully understanding what they are doing. While options are pretty straightfoward, it is important that one understands what they are risking when they invest and research what they are investing to make sure that any risks of loss are minimized. | | | | | | |
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| | | [PDF] Options Trading Strategies Guide | | This FREE strategy guide breaks down 11 specific options methods for a total game plan in any market condition!
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