The popularity of options is due to the likelihood of an average investor earning superior returns.

Question

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The average investor is not likely to be involved in the complexities of options. Option strategies can be very aggressive and risky, or they can be quite conservative and used as a means of reducing risk. Option buyers and writers both attempt to take advantage of the option premiums discussed in the preceding section. Any reduction of individual option trading reduces the ability to create workable strategies for specific companies. For example, the lack of a liquid market can keep institutional investors from executing hedging strategies involving several hundred thousand shares. Even with these limitations in mind, the average investor can still find many opportunities for option strategies if they are willing to follow the markets closely and carefully every day.

The Popularity of Options Is Due to the Likelihood of an Average