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The History Of Digital Options

The History Of Digital Options


What is The History Of Digital Options?

Despite the fact that digital options trading has been practiced for over 30 years, only in the past few years has this financial instrument become an extremely popular method of generating income. Prior to 1973, binary options could only be found in closed markets, often showing up as only a small element of the trading platforms they could be found in. This is quite different from modern binary options trading, which is available on a global scale. Certain key changes have made this possible.

The Chicago Board of Options Exchange played an important role in transforming digital options trading to what it has become today. It was their formation via the Board of Trade that allowed binary options to become over-the-counter transactions. Though trading was not standardized at this time, digital options would eventually become so through different regulations. It was this change that caused several markets to include this trade type in their trading portfolios.

Lack of regulation continued to impact digital options trading for quite some time. Establishment of the Options Clearing Corporation helped this form of trading overcome many of these challenges. Clearer instructions and a greater level of transparency aided in digital options trading gaining a higher level of respect. Along with these changes, set guidelines for trader conduct were also introduced. Those who traded in unethical manners were temporarily or permanently banned from the trading platform.

Despite major improvements, digital options trading remained only a small segment of the trading world. This would forever change in 2008 when the SEC would accept the proposals put forth by the Options Clearing Corporation and allow digital options to be offered in major markets. The American Stock Exchange would be the first to offer digital options, with the CBOE offering them publicly soon after. Today, digital options are widely traded and as such have drawn the attention of thousands who were previously unfamiliar with this financial instrument.

The rules and regulations that were introduced in 2007 and 2008 were only part of the reason as to why binary options trading has become such a popular choice. The transparency of the trading system that allows for less speculation appeals to many. Though the basics of binary options trading have changed very little over time, major changes to how trading is done have been made. Technology has played a vital role, with traders now being able to conduct all trades via online platforms and even smartphones and tablet computers. Trading can now be done from anywhere, with no need to download a program.

Another key change has been in regard to broker improvements. Some digital options broker improvements have been the direct result of increased rules and regulations, while others have been the result of the need to meet the needs of traders. Since 2009, major brokers have improved trading platforms, increased customer service, provided more tools to traders, and included real-time financial data and market news from reputable sources such as Reuters and Bloomberg. Each of these improvements have directly benefited digital options traders and will continue to do so.

The history of digital options trading is an interesting one. What many people now question is what does the future hold? If the number of new traders using binary options each day is any indicator, the future of this financial instrument will certainly be bright. We should also expect to see more in terms of technological advances and even more rules and regulations that will render trading an even safer experience. Progress will surely continue to be made, making digital options an important income generator that should not be overlooked.

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