Recall that way back in 1987, program trading and the idea of portfolio insurance were blamed by some critics for exacerbating a historic stock market plunge. After that, the technique was eclipsed by other forms of computerized trading. Today, algorithmic trading gets most of the attention. But as a subset of such trading, program trading has make a comeback of sorts.

Data from Tabb Group suggests that program trading accounts for 15 percent of volume, up from 10 percent a year ago, notes Traders magazine. The reasons include a need to facilitate passive strategies, better program trading algorithms, the rise of ETFs, the need to hold down portfolio costs and more savvy buy-side players.

"Program trading as a tool is an indispensable part of pretty much every type of client's work flow," one expert tells the magazine. "You can look at a hedge fund client, a passive index provider, a quantitative manager, an active manager. Each one has a different reason for needing tools to trade lists of stocks."

As the trends toward ETFs, passive strategies and perhaps more cross-market arbitraging continue, we'll likely see more broker-dealers innovate in this area. Perhaps we'll see the coming of trades of entire baskets of stocks paired with futures or options sales. ETFs in a sense do some of this already.

Algorithms that trade portfolios still have a long way to run, but more portfolio managers will likely see the benefits sooner rather than later.

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