History of Binary Options

Brokers Who Accept USA Customers & The History of Binary Options

US regulated binary options brokers are very hard to find. Not many binary options brokers accept US customers at all, making it hard to find a broker that caters to the needs of American citizens. And with regulations becoming more strict each day, more and more binary options brokers that were accepting US, are now turning their backs on them. However, there still is a bit of good news. We made a list with trustfull Binary Options Brokers Who Accept USA Customers!

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The history of binary options can be traced to 2008 when it was first introduced publicly as a tradable asset on the Chicago Board of Exchange (CBOE). 2008 was a year that will not be forgotten in human history. That was the year that the cards came crashing in the financial markets, as the subprime mortgage crisis in the US triggered the collapse of Bear Stearns and Lehman Brothers, and subsequently the global financial system. With such a situation that cost many everyday investors all over the world a lot of money, there was a lot of pressure for investments with a lower risk profile to be made available to traders. This was what led to the entrance of binary options trading as a new form of investment for the average trader.

Even though binary options gained mainstream popularity in 2008, it has actually been around for quite some time. In years gone by, binary options were a semi-official investment product, open only to banks, other institutional and high net-worth investors in the Over-the-Counter (OTC) markets. In essence, the situation with binary options was not much different from what obtained with forex trading prior to 1997 when that market was deregulated.

In order to understand when the practice of trading binary options actually started, we would have to go back almost 40 years, to 1973 when options trading on financial instruments commenced on the newly created CBOE. These early days were difficult as the regulatory framework for trading options were not yet developed. Over the years, binary options trading evolved as a less complicated way of trading options. They were still offered as part of larger and more complex contracts, and as mentioned earlier, there was no regulation whatsoever for binary options. There was still no separate liquid market for trading binary options.

These conditions existed until 2007. By this time, the subprime mortgage crisis had begun to play out with the collapse of real estate prices. The Options Clearing Committee (OCC), which had been created in the early 70s to develop the regulatory framework for the options markets, proposed changes that would see binary options elevated to the status of a financial asset that could be traded on its own in the major exchanges. By early 2008, the US Securities and Exchange Commission (SEC) accepted the recommendations of the OCC and made it legal for binary options to be offered on major exchanges as a stand-alone, tradable financial instrument. By May of the same year, the American Stock Exchange (AMEX) started offering binary options to the public for the first time, and the CBOE followed suit the following month.

Even as at 2008, the process by which binary options were traded on the CBOE and AMEX were cumbersome and restrictive. Traders who wanted to buy binary options on CBOE had to purchase the contracts on the S&P 500 index, and only one type of options (call options) could be purchased.

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.

The advances in information technology which has seen the advent of trading software that have been deployed for online use as well as mobile versions of the trading platforms, have seen an explosion of binary options trading. There is a lot more flexibility now. No longer are traders restricted in terms of where to trade or the type of options to trade. Traders can now trade both call and put binary option types, trade a plethora of financial assets across several markets, and can now trade binary options on the go with their smartphones.

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In addition, many more trade varieties have evolved, with traders now being able to trade binary options in three different ways. Recently, a few brokers have upped the ante by being pioneers in providing simulated trading and charting tools for traders to conduct technical analysis prior to trades. This is something that had been traditionally absent with binary options trading.

With more brokers and vendors coming up with products for the binary options markets, the true beneficiaries are none other than the traders, who now have better options when it comes to binary options trading. With the blazing speed at which technological innovations have come on stream in the last 5 years beginning with the iPhone, one can only imagine what the future would hold. One thing is sure; if this blog were to rewrite this article in the next 5 years, there would be a lot more to say about the history of binary options trading.

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