For many years following the creation of options trading, they remained within the exclusive preserve of major investment institutions. Transactions were performed, away from the public eye, as over-then-counter dealings involving the lowest levels of regulatory supervision as possible. The Chicago Board of Trade radically altered this image in 1971 when it founded the Chicago Board Options Exchange (CBOE) by making it the world’s first supervised options trading exchange. Even to this day, the CBOE has managed to preserve its status as the leading global site for options trading.
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First, the Options Clearing Corporation was formed
As the years roll on, further attempts were made to improve the quality of option trading transactions. During these years, the Options Clearing Corporation (OCC) was formed whose central objective was to guarantee that investors attained the options that they bought to the exact specification as promoted. The OCC was granted the legal authority to enforce penalties in cases of abuse.
From all this activity, the concept of binary options eventually emerged resulting from the instigation of a specific specification to create an easier-to-use and simplified trading type that was structured on the key features of the standard option. Although this innovative idea was a major advancement, the new binary options were still primarily traded by professionals within a marketplace controlled by limited regulatory supervision and possessing restricted liquidity.
Binary Options accepted as financial product and regulated in 2008
The next milestone event occurred in 2007 when the OCC filed an important rule change requesting that binary options should be traded on the international stock exchanges. The US Securities and Exchange Commission sanctioned this ground-breaking ruling in early 2008 paving the way for binary options to be legally quoted on the financial markets. The New York exchange took up the baton in May 2008 by permitting the general public to trade binary options for the very first time followed by the CBOE in June 2008.
These radical events initiate a flood of interest by generating a sizeable surge in the popularity of binary options trading. This movement was bolstered even further by a boom in the launch of very sophisticated binary options trading platforms and tools.
The structure and operational features of on-line binary options were also substantially enhanced enabling the provision of increased selections in vital binary options features, such as asset choices, contract types, expiry times, and return ratios. These improvements provided traders with the opportunities to design an extensive range of pioneering strategies that could generate maximum profits with minimum risks.
(Risk warning: Your capital can be at risk)
Increasing numbers of binary brokers
This exciting market sector began to attract ever-increasing numbers of binary brokers who introduced a continuous stream of impressive trading platforms into the marketplace possessing novel and advanced features in quests to attract new clients. A further important rule change was filed and endorsed in 2010 permitting urgently needed modifications to key binary options attributes, such as their fixed risks, odds, and rewards.
As a direct result, the popularity of binary options enjoyed another surge in popularity. As such, brokers were then encouraged to improve their range of trading tools even further by providing, for example, their clients with the ability to trade anywhere and at any time. After all these exciting developments and with such powerful trading facilities now available, you can quickly appreciate why binary options have advanced from total anonymity to the forefront of popular attention in such a short time period.
Was there no existence of binary options before 2008?
You must be wondering that was it only in 2008 that binary options became known. Well, binary options existed even before 2008. However, these were not popular among the average traders because only banks and semi-official bodies could purchase and sell them.
Their history goes back to 1973. Thus, it was 40 years back. However, it wasn’t easy to regulate their trading because it did not fall under the purview of any regulatory authority. In those times, binary options trading did not have regulatory procedures.
However, as time passed, binary options trading became more simplified. The complex contracts still involved these financial instruments because there was still no regulation. Also, a liquid market where the traders could trade these instruments was unavailable.
The future course of action
Once the Options Clearing Committee presented its recommendations, they got widely accepted. The SEC (US Securities Exchange Commission) implemented these recommendations. Thus, trading binary options became a legal and regular practice among traders.
With the onset of May, the American Stock Exchange (AMEX) allowed traders to trade binary options. Thus, binary options started gaining momentum in the market.
With the innovations in technology, these began to get traded online. Various online trading platforms emerged that offered users access to hundreds of options. Thus, the market became wider for the traders, and their profit-earning potential multiplied.
Conclusion
Binary options are not financial instruments that developed or emerged overnight. Their history is scores of years old.
Their profit-earning potential offers the traders a way to easy money. However, it does require research like trading other financial assets does. The final profits depend on your trading skills and potential knowledge.
When were binary options first introduced?
Binary options first became known in 2008. The Chicago Board of Exchange let out these tradable assets in the market. You must be aware that 2008 was very tough for traders. The global recession had just set in, and things turned unfavorable. However, binary options came as a ray of hope for the traders.
The financial system’s collapse demanded that traders invest in some financial instruments with low risk. Thus, an average trader saw this opportunity in the binary options.
