The concept of option trading has existed for some considerable time. In the early days, this investment vehicle remained the preserve of elite investors and was conducted solely as over-the-counter transactions under minimum regulated supervision. The first major event that changed all this occurred in 1971 when the Chicago Board of Trade created the first structured options trading environment by forming the Chicago Board Options Exchange (CBOE). The CBOE was the first of its kind and remains to date the largest options trading platform in the world.
Over the years, regulations improved and the quality of options transactions increased. The Options Clearing Corporation (OCC) was created in order to guarantee that investors purchased and sold assets exactly as they were specified. The OCC possessed the power to impose bans in cases of malpractice. Binary options eventually evolved from these standard options as the result of a specific intent to create a more user-friendly investment type with minimum complications.
However, as the early binary options were still conducted as over-the-counter transactions, this new market still remained very exclusive with little regulation and liquidity. In 2007, the OCC filed a rule change to enable binary options to be traded on the major stock exchanges. The US Securities and Exchange Commission (SEC) approved this ruling early in 2008 legalizing the listing of binary options as tradable contracts on international financial markets. In May of that year, the American Stock Exchange became the first international exchange to offer binary options publically. The CBOE followed in June.
In recent years, there has been a boom in binary options trading with the introduction of highly sophisticated platforms and tools. In addition, the new on-line version of binary options offered greater flexibility and a larger diversification of underlying assets, contract types, strike prices and expiry times. These features enabled more dynamic strategies to be devised that targeted optimum profits at minimum risks. In addition, many new binary options brokers entered the arena boosting improved and more advanced platforms enabling their clients to perform even more lucrative trades.
In 2010, important revisions to the odds, risks and fixed rewards associated with binary options provided further impetus to their popularity. In addition, major brokers implemented policies ensuring that this type of trading became so simple that investors could trade options from the comfort of their homes and even on the move. In effect, the sheer power of the internet allowed users to trade binary options anywhere and at any-time.
These days, binary options are becoming the fastest growing and most popular segment within the investment industry. This is because they possess many advantages compared to other investment types including traditional options. For example, they offer a pre-defined payout and loss structure. In addition, they present investors with the opportunity to open large trading positions in underlying assets using just a minimum cash deposit. Trading decisions could hardly be any simpler because users only have to decide which direction their underlying assets will move, i.e. either up or down.
Traders now have improved possibilities of making worthwhile and consistent profits by trading binary options. They can increase their profit potential even more and minimize their risk exposure at the same time by investing their time to study and master a wide selection of binary option trading strategies that are now widely available. With so much to offer these days, you can readily appreciate why binary options have evolved from total obscurity to such popularity in a relatively short period of time.
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