Options trading volume has been resilient despite the continued low-volatility environment. Those new to options can get started with these basic strategies.
In 2018, the exchange-traded equity options market will celebrate its 45th anniversary in the U.S. Though 2017 marked another year of historically low volatility, with an average daily volume of 16.7 million contracts, the year still ranked among the top three ever, according to data from the Options Clearing Corp.
Why has options volume been so resilient despite the lack of volatility? It’s due in part to a growing appreciation for the versatility of listed options. Whether you’re a small, self-directed options trader or a large institutional investor, there are a number of option strategies that may help you pursue your investment objectives while staying within your risk parameters.
Though TD Ameritrade has seen volume growth in options trading in all client groups, including millennials, millennials are the first generation to grow up immersed in technology, and they’re also known for being value-driven. So, as today's young adults become investors, trading options on a robust online platform seems only natural.
Of course, options trading isn’t suitable for everyone, but if you think they might be right for you, there are some basic option strategies that can be used to accumulate shares, help protect an existing investment or even to enhance the yield of a stock position you hold. Here are a few strategies popular among TD Ameritrade clients who trade options.
Many TD Ameritrade clients, once they become comfortable with the basics, move up the sophistication scale. They use the advanced thinkorswim® platform to assess relative values, consider risks and probabilities, initiate multi-legged option spreads and monitor positions in real-time.
Sure; some option strategies can be quite complex, and as complexity increases the knowledge and sophistication of the investor must keep up. But we believe the next generation is well-positioned to embrace options for their flexibility and versatility, and can use the power of today's innovative trading platforms and free educational offerings to become those sophisticated investors.
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Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
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