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What You Need To Know about Trading Futures And Options
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Futures trading is a risky business. It is a financial gamble. And, like any gamble, you will never know when you will win and when you will lose. The key is simply to play the game based on the cards you are dealt with, what you know about the market so far and hope for the best.
Many traders are lured into futures trading because of the great rewards it can potentially bring. However, you must keep in mind the rule of opposites, in that with great rewards, also come great downfalls. Futures trading, because you're gambling with something that is yet to happen, is nowhere near accurate.
This can also happen when you're dealing with options, because, the value of underlying options are basically placed against futures contracts. When you acquire options, more likely than not you will get them at a discounted rate based on the price of the product at the time they were issued.
Many find stock options trading attractive because it allows people to acquire stock at a discounted price. With this procedure, holders of stock options hope that the shares' value will increase within the period of time given so that they could sell at a higher price and generate a profit.
Options may be exercised at a given time in the future and at the rate at which they were issued, but the holders stand to gain or lose depending on the value of the options at the given future date. Thus, when you really look into the nature of futures and options, they are very similar and related.
Trading Options and Futures: Some Tips
Trading options and futures requires research on your part
Futures trading involves 4 investment categories: namely, speculation, growth, inflation hedges and income. Without adequate knowledge of these four, you won't be able to move freely in the trading market and might even cause yourself to lose.
Do not simply rely on somebody else to do the research and understanding for you. Being able to make intelligent decisions, no matter how inaccurate, will sometimes make the difference between a win and a loss.
You should invest no more than 10% of your net on futures.
Futures trading should not be your first foray into financial trading because it involves a considerable investment. You should only do it when you're confident that you have enough knowledge and that your other investments are working out for you.
The market is unpredictable.
No matter what experts say or predict will happen to the market months or years from now, nobody will be able to make perfect forecasts. Therefore, if you're planning to invest your hard-earned money into financial trades, do not put all your eggs in one basket.
While it is possible that you will make a fortune out of this risk, it is also likely that it will be the one that will send you to the poorhouse. Tread carefully.
Futures Options Trading News
Gold COT Report - Futures
The COT reports which we look at each week provide a breakdown of each Tuesday's open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. The weekly reports for Futures-and-Options-Combined Commitments of Traders are released every Friday at 3:30 p.m. Eastern time.
Read more...Exchanges deal failure to open up futures market
LONDON (Reuters) - The failed merger of Deutsche Boerse AG and NYSE Euronext has highlighted their grip on Europe's futures and options trade, raising the prospect of reform to open the market to new entrants. European futures and options trading, estimated at some $62 trillion in 2011 by the World Federation of Exchanges, is systemically important to the European financial system. Largely ...
Read more...Pros and cons of options vs. futures
For retail investors looking to broaden their horizon, the first step is usually options because they can be traded in the same account as equities. Many then take the next step into futures, but the two ...
Read more...CFTC panel to review high-frequency trading
The Commodity Futures Trading Commission is expected to review a rapid-fire technique that allows traders to buy and sell shares at lightning speed, a step that could help it better understand the impact ...
Read more...Pros and cons of options versus futures
For retail investors looking to broaden their horizon, the first step is usually options because they can be traded in the same account as equities. Many then take the next step into futures, but the two ...
Read more...CBOE Futures Exchange Experiences Busiest January Ever, Trading Volume Up 4% Over 2011
CHICAGO, Feb. 1, 2012 /PRNewswire/ -- The CBOE Futures Exchange, LLC (CFE) today announced that trading volume during January 2012 totaled 811,283 contracts, an increase of four percent from the 778,157 ...
Read more...TABB Says Trading of VIX Products Has Grown at a 5-Year CAGR of 130%, Introducing Lucrative Arbitrage Opportunities
Traders tell TABB Group that VIX exchange-traded products have been a key driver behind the trading of VIX futures and options, expanding at a five-year compound annual growth rate of 130%, quite possibly influencing the price of the index the products they have been designed to track.
Read more...CFTC Requires Registration By Mutual Funds Buying Commodities
The U.S. Commodity Futures Trading Commission adopted rules requiring registration by mutual funds when they have investments in commodities.
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