A McLean, Va.-based asset management firm plans to take options trading mainstream.
Vest Financial’s options trading platform allows investors to automatically hedge their equity and ETF investments without having to conduct heavy research into options strategies.
“The options market is huge, and the benefits of these kinds of investments accrue to institutional investors,” says Karan Sood, Vest’s CEO. “Those benefits do not extend to the middle-market institutional or retail investor.”
Vest was originally backed by California-based start-up accelerator Y Combinator, but after being featured at the tech development firm’s 2015 demo day, it picked up interest from the Chicago Board Options Exchange.
Earlier this year, CBOE Holdings made a majority investment in the options platform, and moving forward will make its own options strategies available through Vest.
“Karan and his team are distilling the presentation and benefits of options to their most simple form,” says John Deters, the CBOE’s chief strategy officer. “Someone who hasn’t spent a lot of time applying options trading successfully, or someone who isn’t entirely sophisticated in options investing should consider Vest’s product.”
The terms of the Chicago Board Options Exchange’s investment were not made public, but the company says that the transaction was funded with existing cash.
Sood hopes Vest's platform, at http://www.vestfin.com, will expose the greater investing universe to options trading, especially advisors and investors whose lower risk tolerance may be keeping them away from equities.
Sood, a veteran of options trading at ProShares Advisors and Barclays, explains that Vest will make it easier for advisors to explain the benefits of options trading to their clients.
“Most advisors, especially the bigger ones, know options, but are looking to make it simpler” for their clients, Sood says. “Advisors already like what options deliver, but they don’t want to get into the complexity. We do a lot of the hard work around the implementation of options, which frees them up to spend more time growing their practice and managing their client relationships.”