options trading volume sets new record (again)

Trader13

Trader13

Attached is a screenshot of a Volume Query from the Options Clearing Corporation website. They announced that options volume traded in 2010 marks the eighth consecutive year a new annual trading volume record has been set.
 
Not unexpected. Everyone either buys puts for insurance, buys calls to speculate, or writes calls to cover the owned underlying. Nobody sells the underlying anymore.
 
I've been trading options for about 2 months now. I still have a lot to learn but I find writing naked puts is a nice way to generate income. I'm looking forward to learning some different ways to better invest using options in addition to writing naked puts.
 
it's a nice way to blow up too ... ask anyone that has had those during a crisis period ... (enough examples the last 20 years)
 
Quote from cvds16:

it's a nice way to blow up too ... ask anyone that has had those during a crisis period ... (enough examples the last 20 years)
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Thanks, because I've been thinking about that to. I don't like to put most of my investments toward any one thing including writing naked puts. Although, a partial amount of allocation doesn't bother me. What do you currently practice the most when trading options?
 
I haven't traded options directionally for like a decade, traded vol afterwards till 2006 in semi-off floor market making. Nowadays it's only FX for me ...
 
Hedging and speculation using options has been around a long time. I don't think they fully explain the remarkable growth in options volume. Some other explanatory factors include:

1) ETF's: They used to be considered exotic alternatives and now they are some of the most popular trading instruments. Many have options.

2) Electronic option exchanges: Have nearly replaced the floor trading. Tighter b/a spreads and less slippage overcome some of the former knocks against options.

3) Brokerage support: Brokers have increasingly provided options capabilities in their platforms.

4) Education: Infomercials, online forums, books, and mentoring programs all spread the word about the features of options and increase demand through awareness.
 
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