The options market has seen four consecutive years of record volumes since 2020, and Cboe Global Markets (CBOE) CEO Fred Tomczyk joins Catalysts to discuss the trend. "If you look across the option market, it's still more institutional than retail. What's happened more recently is you've got a little increase in volatility, which is causing trading. You've got more expiration. So we've introduced products to give you expirations every day of the week. So that's increasing volume because it makes it more efficient to hedge risk around certain market events that you may be worried about. But it's also because the retail brokers have introduced option trading and education to help people get comfortable with them. So it's a whole ecosystem that basically is growing right now," Tomczyk tells Yahoo Finance. While there has been "very strong growth" over the last four years, Tomczyk expects the market's growth to "moderate somewhat" over the next three to five years. The unwinding of the yen carry trade at the beginning of August was a major liquidity event, and Tomczyk notes that while many investors were motivated to sell, the market normalized the next day. "Sometimes you can just be patient and ride through that. In other cases, you need to stay on it, and in other cases you, depending on your position, don't want to leave it on overnight, so you want to close it down before you close for the night," he explains. Thus, he recommends traders to learn as much about the options market as possible before diving in. "If you learn how to do it properly, you're going to start with generating income. You're going to sell covered calls, maybe cash-covered puts. So you're just generating an extra yield on an existing portfolio. So that's the first place to start. And then if you're going to migrate up, you migrate into spreads and defined outcome trades," Tomczyk says. He continues, "So when you place a trade on the option market, two lessons are always know your downside and make sure you're protected and you're comfortable with it. Secondly, if you're going to trade options, stay on it. It's not something you put on and forget like a stock for five years or so. You have to stay on it every day. If you do those two things, your odds of success improve significantly." Watch the video above to hear what Tomczyk says about Cboe's index options becoming available to Robinhood (HOOD) users. To watch more expert insights and analysis on the latest market action, check out more Catalysts here and more Market Domination Overtime here. This post was written by Melanie Riehl
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