Rewind thirty years and there were just four options exchanges, single listings and paper tickets. Now there are 19 different exchanges, a huge amount of retail traders and the ability to make options trades over digital platforms and on mobile phones.
The options market has “seen a ton of changes over thirty years,” Stacey Gilbert, senior director of the Options Institute at Cboe (CBOE: Cboe), told Benzinga during a recent interview. “The sophistication of options traders has grown tremendously over the years which I think is fantastic.”
Education: The Cornerstone Of Options Trading
For far too long, retail investors had largely been shut out of the options market. But thanks to advancements in trading technology and companies like Cboe, options trading is now more available to retail traders. But with that comes the need for education, which is where Gilbert and The Options Institute come in.
Gilbert joined Cboe in May as part of an initiative to continue The Options Institute’s mission to educate investors worldwide. The Options Institute was founded in 1985 and provides investor education through an array of resources that teach the fundamentals of options and trading strategies for investors of all abilities. While it originally started as a way to demystify the options market, Gilbert says it has expanded to other areas across the financial markets.
“As the evolution of financial services has gone [on], as product innovation has happened, we incorporated more education tools for investors, to better understand what the offerings are out there so they can make better decisions for themselves for their investment objectives,” Gilbert told Benzinga.
Keeping It Free
Unlike other offerings, The Options Institute keeps all of its education free. Gilbert says that is for a key reason. The more education a person has when trading options, the more likely they are to stick with it. Cboe doesn’t want a new trader’s first experience with options to be a bad one, which is why there is such a focus on making sure there is better education, so when traders use options, they are trading for their appropriate risk profiles.
Gilbert says investors should approach options trading based on their goals and risk tolerance rather than thinking they will get a big return from a single trade. They have to understand the trades they are placing, the risk associated with the trade and how to get in and out of it, before executing the trade. What’s great about the options market, she noted, is that if investors don’t choose to trade options, they can still use tools like the Cboe Volatility Index or the VIX Index – also referred to as Wall Street’s “fear gauge” – to get a read on volatility, for free. That can help them make better trading decisions.
“I am a true believer in incorporating options into investment objectives,” said Gilbert. “It can be super powerful if you think of income, think about protection, these are tools that can help investors have smoother returns over time and actually reach the goals they are looking for rather than go in and try it once, have a bad experience and never try it again.”
Adoption of options trading is increasing among retail investors but like any other financial instrument, it’s not without risk. The good news is, investors interested in options don’t have to go at it alone. Thanks to Cboe and The Options Institute they have access to all the education they need.
Click here to head over to The Options Institute to get started on leveling up your skills!
Featured image courtesy of Cboe.
This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.
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