Fifty years ago this week, options trading was introduced and the stock market was changed forever. On April 26, 1973, the first listed options were traded on the floor of the Chicago Board of Options Exchange (CBOE). Only 16 stocks traded options on that first day when strike prices, expirations, and call options were introduced (put options were not yet available).
It had been a struggle to bring this options concept to reality. The new style of trading opened up new opportunities to earn profits and protect investments. April 26 was a landmark day for those of us who earn a living trading options.
My good friend Larry McMillan was around back then, and he has been publishing a series of articles to celebrate this milestone. In these interviews, we learn how the CBOE’s first President, Joe Sullivan, had to overcome numerous political hurdles to get options trading up and running. The Securities Exchange Commission (SEC), Options Clearing Council (OCC), and others were blocking his team’s efforts.
Options trading was a game-changer for investors
When options trading began, it was considered one of the great innovations of its time. Little did Joe and his team at the CBOE know that investors and traders would eventually cozy up to options as a daily trading exercise.
This new style of trading eventually spawned many new products, including weekly options, quarterly options, options on futures, options on indices, and options on inverse products, volatility, currency, and more recently, crypto currency. If something is traded in the marketplace, you can be sure options will follow.
The ability to hedge investments using options has indeed been a game-changer for investors. You can create a new income stream, reduce portfolio volatility, and take advantage of down markets.
When put options were made available a few years after options trading went live, traders had an entirely new way to protect portfolios against loss and create another income-generating stream.
I encourage you to visit Larry’s site and read the CBOE’s origin stories. We all owe a debt of gratitude to these pioneers who delivered upon the promise to make the trading marketplace better and more exciting.
Image courtesy of optionsstrategist.com
