Why Options Trading experienced a tremendous growth in popularity in 2020!
“Nine out of ten of the busiest days in the options market entire history going back to 1973 have happened this year in 2020”
2020 was a uniquely challenging year for the majority of Americans, and a dramatic time for the markets as well; with numerous industries being severely impacted by the pandemic while concurrently in the middle of a tumultuous election cycle. However choppy markets can be particularly attractive to options traders, who stand to make a sizable profit from big swings in the market.
This dramatic increase in day to day trading range, in addition to a sustained increase in market volatility created an ideal environment for many new options traders. The advent of easily accessible mobile trading—with many brokers recently deciding to eliminate or lessen commission fees— sealed the deal and made for a “50% increase in equity option trading over the previous year”.
With people being relegated to their homes it seems that many new investors have taken interest in options trading. Some have made the analogous connection between this recent activity and sports betting being that many of these new investors are simply “gambling” on favorites or following wild speculation of others in online trading forms. Most of these new traders are buying out-of-the-money calls nearing expiration—a strategy that takes little to no experience and most of the time results in a loss of the premium payed.
On every trade there is someone on the other end who is hoping to take your money. Your best chance of coming out on top is education. Making informed trades is the difference between becoming profitable, and being out of the game before you’ve even had a chance to understand the fundamentals. There are plenty of resources online however the sheer amount of information can be overwhelming.
A good place to start is by joining a community like J&M Option Trading— A social trading community of like-minded people who can help provide education and resources to members on sustainable and consistent options trading strategies. See our Membership Plans and Courses for more information.