Options Trading And Retail Investors

HedgeFundLIVE.com — Today’s market rally was directly linked to M&A news over the weekend. Mostly of note was AT&T’s deal to acquire T-Mobile, there was also financial sector action when Charles Schwab Corp announced it has agreed to acquire OptionsXpress Holdings (OXPS). OptionsXpress is an online retail brokerage firm providing trading platform services for investors who use options, stocks, futures, mutual funds and fixed-income investments.

Options trading has increased every year since 2002. According to the Options Clearing Corp. over 3.9 billion contracts were traded in 2010. Schwab is undoubtedly looking to compete more in the retail trading area, as derivatives access has become more important to small investors over the last 10 years due to volatility spikes caused by globalized markets and the perceived growing frequency of black swan events. The acquisition can be seen as a direct response to TD Ameritrade’s  2009 purchase of Thinkorswim Group Inc., another derivative trading company.

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