The History of Binary Options

The history of Binary Options can be traced back to 2008 when they were first introduced as a tradable asset on the Chicago Board of Exchange (CBOE). 2008 was the year when 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 afterwards the global finance system. With that situation which cost a lot of investors all over the world a lot of money there was a lot of pressure for investments with a lower risk for traders. This was the entrance for Binary Options Trading as a new form of investment for the average trader.


After some years Binary Options were a semi-official investment product which was only open to banks, other institutional and high net-worth investors in the Over-the-Counter (OTC) markets. Basically the situation with Binary Options was not very different from what obtained with Forex Trading before in 1997 when that market was deregulated.


To understand when the practice of Binary Options Trading actually started we would have to go back almost 40 years to 1973 when Options Trading on financial instruments started on the newly created CBOE. These early days were difficult because the regulatory framework for trading Options were not yet developed. Over the years Binary Options Trading evolved as a less difficult way of trading Options. They were still offered as part of larger and more complex contracts and there was no regulation for Binary Options. Most notably there was still no separate liquid market for trading Binary Options.


These conditions existed until 2007. At that time the subprime mortgage crisis had started to play out with the collapse of real estate prices. The Options Clearing Committee (OCC) that had been developed in the early 70s to create the regulatory framework for the Options markets proposed changes which would see Binary Options elevated to the status of a financial asset which could be traded in the major exchanges. In 2008 the US Securities and Exchange Commission (SEC) accepted the recommendations of the OCC and made it legal for Binary Options to be provided on major exchanges as a tradable financial instrument. In May of the same year the American Stock Exchange (AMEX) began offering Binary Options to the public for the first time.


At 2008 the process by which Binary Options were traded on the CBOE and AMEX were difficult and restricted. Traders who wanted to buy Binary Options on CBOE had to acquire the contracts on the S&P 500 index and only call options could be purchased.


The advances in information technology that has seen the advent of trading Software which have been introduced for online use as well as mobile versions of the trading platforms have seen a big increase of Binary Options Trading. There is a lot more flexibility now. You are no longer restricted in terms of where to trade or the type of Options to trade. Now you can trade both call and put Binary Option types, trade plenty of financial assets across several markets and can now trade Binary Options on the go with your smartphones.


Besides many more trade varieties have evolved with which you are now be able to trade Binary Options in three different ways. Lately some Brokers are providing simulated trading and charting tools for traders to implement technical analysis prior to trades.