An independent study that shows options investors are savvier than their non-options trading counterparts is helping an industry group promote the hedging tool to financial advisors.
Investors who use options tend to be more educated, financially literate and open to new risk management ideas, according to the study sponsored by the Options Industry Council (OIC). The OIC is funded by eight options exchanges, including the Chicago Board Options Exchange (CBOE), NASDAQ Options Market, and NYSE Amex Options.
“If I could sum up this study in one page, it says that options traders are affluent, sophisticated and open to new ideas,” said Eric Cott, OIC director, whose mission is to be the “minister, preist, and rabbi” of the options world.
The study released on Thursday, April 29, and conducted by Harris Interactive shows that 83% of options users consider themselves “extremely knowledgeable investors” compared to 63% of non-users. Eighty percent of users are college graduates versus 73% of non-users.
Options users also are more strategic and likely to have exchange-traded funds, futures and American Depository Receipts (ADR) in their portfolios than non-options users.
At the same time, options users are likely to be more active. They made an average of 31 stock trades per year compared to 24 for non-options users. In 1995, this was 23 trades for options users compared to 14 for non-users and 35 to 21 in 2000.