Options, originally for hedging, now dominate markets, driving stocks to unprecedented highs.

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The options market is experiencing an unparalleled surge, with 2024 marking the fifth consecutive year of record-breaking trading volumes. Nearly 10.2 billion equity options contracts were traded, surpassing the previous year’s total of 10.1 billion. This boom reflects the growing participation of both retail traders and institutional players, highlighting options’ increasing relevance in the financial landscape.

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The U.S. now boasts 18 active options exchanges, with MIAX Sapphire joining the ranks in August 2024. The new exchange’s plans to open a physical trading floor signal a nod to traditional methods amid the rise of electronic trading. This expansion offers traders greater flexibility to hedge and speculate.

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The stock market has also soared, with the S&P 500 rising 23% in 2024, marking its second consecutive year of 20%+ gains. Strong economic growth, corporate earnings, and AI advancements have driven the surge. Analysts forecast S&P 500 earnings to grow by 14.8% in 2025, spurred by expanding sales and profit margins, with revenue growth hitting a three-year high of 5.8%.

Sources:
https://www.morningstar.com/news/marketwatch/2024123174/2024-was-another-record-breaking-year-for-options-trading-whats-on-tap-for-the-industry-in-2025

https://www.msn.com/en-us/money/top-stocks/will-the-stock-market-soar-or-crash-in-2025-most-wall-street-analysts-share-this-opinion/ar-AA1wQohr

https://www.fool.com/investing/2025/01/01/10-stock-market-predictions-for-2025/


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