It has been almost 35 years since options were invented. All the theory and all the strategies that exist today were around then. But it is only recently, very recently, that options have come to the forefront as a credible and viable alternative to the individual investor.

The viability of the option product has always been there. After all, options were invented to be the perfect hedge. An instrument designed for protecting positions from risk. An instrument designed for risk adverse traders and investors. Why has it taken so long for investors and traders alike to appreciate and understand what options are and why they are so valuable to consistent profitability?

The answer is credibility. Options are not as easily understandable as stocks. They are more powerful due to their leverage and thus more sophisticated in their use. It takes more time and proper education to master options. Most investors do not want to spend the time in the educational process necessary to learn options properly, and most instructors do not have the proper expertise to teach options properly.

The lack of proper education in the options market can lead to the improper use of options by the investor. When an instrument as powerful as an option is misused, big losses can and will ensue. This fact lead to the media taking a negative outlook on options (they did not understand them either) and negative publicity followed.

But recent news announcements are bringing about a wind of change for the options markets and the use of options by the individual investor. First, the NASDAQ has announced that it will list options on its platform by the end of 2007. Further, the NASDAQ petitioned and was granted permission to list and trade options in pennies.
Finally, the SEC, acknowledging the options hedging abilities, has initiated new margining requirements for positions using options as a hedge. These requirements will provide the investor with significantly more buying power.

With all the new credibility, options are now the viable, powerful, risk hedging tool they were originally designed to be. Now the question is what can options do for you and why should you use them. Among all the reasons you should use options, there is one simple, indisputable fact that applies to all of us investors.

Market environments and their constant changes are the reason we should all know options. This fact, combined with the fact that it is your own hard earned money at risk in these ever changing, volatile, and unpredictable markets is best reason you could ever have. Options are the only investment product that allows an investor to protect and enhance profits in any market environment.

The fact is that options offer the investor opportunities in all market environments. Thankfully, the false and incorrect statements of the past that have bedeviled options have been proven to be just that -“false and incorrect.” These once misunderstood investment vehicles have now stepped into the limelight. They are becoming a favored mainstream tool used by investors at all levels. But why? What advantages do options give the investors?