Wednesday, January 10, 2007

The truth of a growing stock options.

At the end of 2006 we look back and see that this was another hit year for the total of options continue to increase. It is stated that the the total option volume hit a recored 2.02 billion contracts. That's even a 35% increase over 2005 and marks the fourth consecuive yea of 30% plus volume growth.

If history continue to repeat itself in this area of stock option contracts. It might be worth a little more of your time to check into, and read a little more information about stock options.

This big increase player is the role of the hedge funds, these hedge fund are making up nearly 25% of trading volume in both options and equities. Plus the fact that traditional mutual funds use options to reduce risk, help investing, and generate income. The most evident of it all is the covered-calls and buy-write funds, which continue to raise and have risen over $100 billion the past two years.

With all this information, it's worth a look to see how much of stock options are coming down the pipe lines. In a recent survey by Schwab of 2,000 of its stock option clients revealed that more than half use options for income generation and some 46% are using options as part of their retirement-planning portfolio.

Plus the growing fact of mainstream brokers such as OptionsXpress, Schwab, E*Trade, and others. All these brokers are seeing this trend in stock options and continue to provide great resource, educational tools, trading tools, and even more option eductional tools. It seems as if finally investors have put a side the idea that we have been hearing for years which is "stock options are to risky" and "options are just to hard to learn". Plus, add the factor that all across the board commission rates have dropped which adds helping the stock options market overcome these myths.

Finally, we have to throw in the exchange-traded funds that continue to grow and will provide another great way to utilize stock options. For example, ETFs such as the Spyder Trust (SPY), the Nasdaq 100 Trust (QQQQ ) and iShares Russell 2000 Index (IWM) are typically the most-active options, trading collectively an average of more than 350,000 contracts a day.

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