A lot has changed in the options world since I started my career as a floor trader on the Chicago Board Options Exchange (CBOE) thirty years ago. Obviously, technology has transformed the exchanges, and with one or two exceptions, the live pits with crowds of screaming traders, like in Figure P.1, are largely a thing of the past.
At the same time, options markets are no longer confined to industrial countries or limited to instruments such as stocks and commodities. Contracts are now listed on a wide array of different asset classes, including fixed income, precious metals, energy, and even volatility. In addition, sufficient advances in technology have enabled many emerging economies to offer options as investment opportunities and as tools to manage risk.
My focus in this book is helping you, the retail client, understand some of the more actively traded securities in the U.S. markets, where options on equities and futures trade on more than a dozen different exchanges today, and only two—the Chicago Board Options Exchange and the Chicago Mercantile Exchange—are hybrid markets with both electronic and floor-based pit trading.
Technology is not only driving how instruments are traded, but it has changed how information flows as well. It has leveled the playing field for individual ...