Sizing up the stock market with ETFs

摘要

Compartmentalizing the U.S. stock market into small-, mid- and large-cap sectors and using exchange-traded funds and their options gives traders a number of advantages. The Standard & Poor's 100 stock index is a familiar index to old-timers in the options trading world. In 1983, it became the first index to have listed options linked to its performance, and from that point forward, the well-known OEX symbol became the most popular way to speculate on the broader U.S. stock market using options. Through time, however, competition from newer index options such as those on the S&P 500 index (SPX) and the Dow Jones Industrial Average (DJX) has driven a lot of the trading activity away from the OEX. In addition, during the last few years, a host of exchange-traded funds (ETFs) have emerged on the options trading scene.