Maybe you have been stock trading or investment for quite a while and they are trying to find new opportunities.
Have you thought about index options? They are certainly not simply for institutional investors anymore.
In fact, many retail equity options traders can make a straightforward transition to Mini S&P 500 and Mini Russell 2000 Index options. That is because they are smaller versions of the equivalent standard index options contracts. At 1/10th the dimensions of the standard contracts, Mini Index options allow retail traders to get broad market exposure and execute trading strategies with less capital.
5 Reasons to Trade Index Options
Index options will help traders diversify a portfolio and gain broad exposure with (generally) one trade. As compared with single stocks, index options reduce the possibility of experiencing a spot move and help narrow the main focus to promote risk rather than individual company risks.
Index options tend to have lower volatility than alternatives on individual stocks. Volatility around earnings reports, mergers, along with other news events can have a significant impact on stock options prices. But with index options, those volatile moves have a tendency to lessen.
Index choices are European style, meaning they cannot be exercised before expiration. Equity options, however, could be exercised anytime. Share settle to shares of the underlying stock, while index options settle to cash.
Index options typically qualify for the 60% long-term, 40% short-term capital gains tax treatment.*
Index options will have narrower bid/ask spreads than single-stock options due to greater liquidity.
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