Articles and Updates

OIC instructor Mark Benzaquen attended MoneyShow Orlando, a financial conference that connects individual investors and financial advisors with insights from market analysts, portfolio managers, and other financial professionals.

Have you ever wondered why, in options trading, brokerage firms require each order to specify whether it is “to

World Investor Week (WIW) is an annual global campaign spearheaded by the International Organization of Securities Commissions (IOSCO) to raise awareness about the importance of investor education and protection. Explore the World Investor Week website for details on events and other opportunities to participate.

This month, OIC explored calendar spreads (time spreads using the same strike, different expirations) and diagonal spreads (different strikes, different expirations).

OIC instructor Mark Benzaquen joined Anthony Ewing, CEO and co-founder of Thoughtium, on the firm’s long-running live series Navigating Now.

OIC Instructor Mat Cashman appeared on Chicago Future of Finance with host Oliver Renick, a journalist and financial broadcaster who covers financial markets and innovation in trading. The series highlights Chicago’s role as a hub for derivatives, exchanges, and market infrastructure.

In August, OIC hosted two webinars featuring Mark Benzaquen, OIC instructor and Principal, Investor Education, OCC, covering both debit and credit spread strategies

Hosted by long-time trader and educator Jermal Chandler, the Tastylive show Engineering the Trade, explores the financial markets, volatility, and the realities of trading through in-depth conversations with industry professionals

In July, OIC hosted two webinars, The Protective Put: Managing Downside Risk and The Collar Strategy: Balancing Risk and Potential Reward, led by OIC instructor Roma Colwell.

There’s been a lot of chatter about the ‘Rule of 16’ lately, especially during these turbulent market times. While the math behind it is fairly basic, the idea itself deserves a closer look

In June, OIC hosted two webinars, Premium Income I: Covered Calls and the Poor Man’s Covered Call and Premium Income II: Cash-Secured Puts & the Wheel Strategy, led by Ken Keating, OIC Instructor and Principal, Investor Education, OCC.

Understanding the Risks and Rewards of Options Trading: Key Insights for Buyers and Sellers. In May, OIC hosted two webinars

In April, OIC hosted two webinars led by Mat Cashman, OIC Instructor and Principal, Investor Education, OCC. The sessions provided attendees with foundational tools for navigating option markets using volatility metrics.

The Options Industry Council (OIC) is excited to introduce Ask Us (Almost) Anything: OIC Office Hours! This initiative is an extension of our monthly webinar program and provides a dedicated forum for you to ask your options-related questions.

The first exchange-traded fund (ETF) in the U.S. was the S&P 500®; Depository Receipt (SPDR®), launched by the American Stock Exchange in January 1993.

OCC (The Options Clearing Corporation) / The Options Industry Council (OIC) attended the 2024 Benzinga Global Fintech Deal Day and Awards and was selected as winner of the “Best in Financial Education” award.

Every listed option has a minimum permitted trading increment. However, due to a program that started several years ago as an experiment and is now a permanent feature of the market, this increment can be as low as 1 penny.

For the final quarter of 2024, The Options Industry Council (OIC)® has a robust schedule of new events being prepared, including discussions of zero days to expiration (0DTE) positions, volatility products and a creative method for thinking about the Greeks.

World Investor Week: Join OCC & OIC in promoting investor education and financial protection. Explore

Option prices are driven by all market participants, whether that is a bank, a fund manager, a market maker, or an individual investor. The process of buying or selling an option begins when one of these market participants submits an order, such as a market order or a limit order, to their brokerage firm. The order then flows from the brokerage firm’s platform to an exchange. Once an exchange receives the order it is sorted by class, series, bids, offers and the desired execution price. Depending on the price, one of three outcomes could take place: One scenario is that the order is executed, and the fill is reported back to the investor. Another possibility is that the order may be placed in a queue based on the investor’s price, awaiting execution.  Another potential outcome is that if the order improves either the bid, by being the highest price a buyer is willing to pay for the option, or the offer (also known as the ask), by being the lowest price where a seller is willing to sell, it is displayed in the option chain and made available to all traders. The data in a typical option chain is constructed by Options Price Reporting Authority, LLC (“OPRA“) by collating prices from all options exchanges into the best bid and offer, also known as the National Best Bid and Offer (“NBBO”).  The number of active buyers and sellers generating bids and offers is often considered a measure of order flow, and the number or size of the bids and offers is viewed as an indicator of supply and demand. The bid size shows the demand to purchase a particular option at a given price while the ask size shows the supply of options for sale at the ask price. If the bid size is greater than the ask size, this may be an indication that the demand to buy those options is greater than the supply to sell the option.     When viewing an option chain quote, the spread between the bid and ask is as notable as the bid and the ask prices themselves. Investors may wonder whether trading volume drives the bid-ask spread or if the bid-ask spread drives trading volume. Although both ideas have merit, many factors can impact either narrow or wide bid-ask spreads, including economic events, anticipated news such as earning announcement, perceived trading risk, and competition of market participants. Even the width of the underlying asset’s bid-ask spread can impact the option’s bid-ask spread. For instance, a wide underlying bid-ask width may produce a wide bid-ask width in the corresponding options  Besides identifying the specific events that may impact the bid-ask spread, another consideration is the impact the bid-ask spread may have when entering and exiting a position. Depending on the bid-ask spread, and order type selected, the order may be exposed to what is known as slippage.  Slippage is the difference between the expected trading price and the actual traded price. Even though the word “slippage” may have a negative undertone, the trade outcome can result in a more favorable price (positive slippage). A worse-than-expected price would be negative slippage. Either way, wide bid-ask spreads may have more risk of slippage, whereas a narrow bid-ask spread may be less prone to slippage. Selecting the right order type that fits an investor’s specific risk tolerance can reduce slippage, but there are trade-offs to consider.       Investors generally choose between two order types with options. One is a market order, which is typically executed on the quoted offer price for a buy order and the quoted bid price for a sell order. Market orders may have a quick fill turnaround time, but they also can have a greater chance of experiencing slippage. Meanwhile, the other type of order, a limit order, may mitigate slippage. Still, although a limit-order involves the investor setting an execution price, it also requires the understanding that the order might not be executed at all if the limit price is never reached. The investor will need to consider these trade-offs on an individual basis.  For investors, developing an understanding of the bid-ask dynamic, using a balanced analysis of prices, the size of the bid-ask and the width of the spreads, may help determine the right order type for their projected outcome  Key Takeaways  When viewing an option chain, the bid is the highest price an investor is willing to pay, and the ask is the best price at which an investor is willing to sell.  The bid size and ask size is an aggregate number of option contracts available at those prices. Bid-ask size can be used to gain insight into the supply and demand of options. Slippage is the difference between the executed price of an option and the perceived theoretical fair value of that option. Slippage can be positive or negative.