Options and Futures Markets

The first formal options market was the Chicago Board Options Exchange (CBOE), begun in 1973. Soon after, several exchanges introduced options contracts to their "product lines." Now options are traded on such exchanges as the CBOE, the Chicago Board of Trade (CBOT), the Pacific Stock Exchange, the Philadelphia Stock Exchange, and the American Stock Exchange. As an indicator of the growing interest in options, we note that the dollar value of options traded annually on the CBOE now exceeds the value of the stocks traded annually on the AMEX. Options are traded on both exchanges and in the over-the-counter market, with most of the recent growth in the over-the-counter market.

Futures contracts are traded on (among others) the CBOT, the Chicago Mercantile Exchange, the Mid-America Commodity Exchange, and the New York Futures Exchange. Some futures markets specialize in certain contracts, either by preference or by state law. For example, the International Petroleum exchange specializes in petroleum products such as crude oil and gas oil. However, most commodities exchanges deal with a variety of futures contracts.

Like the equity markets, options and futures markets are subject to state and federal regulations (to different degrees), as well as to self-regulation by the markets themselves.3

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