After a beautiful holiday with the kids, feeling tan, refreshed, & ready to go.
I had time to do some deeper thinking about recent market developments like 0DTE options, AI and how they affect options markets into the future.
Buckle up for a fascinating timeline of options & explore its incredible evolution! ☟
➠ ANCIENT GREECE
σ Thales, philosopher & mathematician, made the first recorded options trade.
He ingeniously secured the right to use olive presses w/o owning them, predicting a bountiful harvest. When harvest season arrived, Thales’ prediction proved accurate.
Demand for olive presses skyrocketed & Thales now held the rights for a majority of the crop.
Laying the groundwork for modern options trading!
➠ 17TH CENTURY AMSTERDAM
σ In 1602, the Amsterdam Stock Exchange became the world’s first stock exchange & center of international trade w/establishment of the Dutch East India Company (Vereenigde Oost-Indische Compagnie or VOC).
VOC was one of the first modern corporations in the world & issued shares to investors to raise capital for overseas trading ventures.
Market volatility around VOC shares led traders to use options for risk management.
Options allowed traders to buy/sell VOC shares @ predetermined prices, serving as insurance against adverse price movements.
The Dutch pioneered standardized options contracts.
➠ OPTIONS COME TO USA
σ In the early 1900s, options trading reached the US, with OTC options among sophisticated investors
But it was marked by a lack of regulation, standardization, & transparency. Making it difficult for retail investors to navigate
Customized contract terms & the absence of a centralized clearinghouse increased complexity + counterparty risk.
This environment limited options trading mainly to institutions/professionals.
Until the establishment of…
σ In 1973, the Chicago Board Options Exchange revolutionized options by establishing the first centralized marketplace
Introducing standardized contracts with uniform terms & conditions, making options more accessible & transparent.
Followed by increased liquidity, tighter spreads, & more efficient trading.
Options volume surged.
➠ THE INTERNET ERA
σ Tech advancements + online platforms revolutionized options again, making them more accessible, efficient, & cost-effective
Online brokerages with user-friendly interfaces & advanced analytical tools made it a dream for retail.
Educational resources & tutorials lowered the barrier to entry. While real-time data, news, & research helped them stay informed.
In parallel, leverage proliferated, enabling investors to control more significant amounts of assets.
➠ PRESENT DAY
σ Options are an integral part of modern investing among individual investors & institutions due to their versatility in achieving various financial goals
Allowing you to:
• hedge risk
• generate income
• leverage capital
• exploit arbitrage opportunities
➠ THE FUTURE
σ AI & machine learning are set to revolutionize options once again
New platforms leveraging AI & machine learning will make options trading more user-friendly & inclusive, further breaking down barriers to entry.
Likely also leading to enhanced decision-making, new innovative financial products, & trading strategies
➠ So, are you ready to embark on your own options journey?
We can help
We’ll be holding our first Options Trading Bootcamp of the year on April 29-30
A virtual deep dive into the world of options, with a syllabus & teaching to strengthen your options game no matter your experience level.
There’s no better time to learn how to profit from volatility than right now.
PLUS (!), all attendees will receive a free 3-month Bundle Subscription to Option Insights!
A limited amount of attendees are allowed on the call at once, so be sure to click the link & reserve your seat ASAP.
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