One of the main questions I receive as a broker after presenting a futures option spread to a client is, “Why?” Traders want to know why they should be entering an option spread as opposed to purchasing or selling an option outright. This article will help to explain the Why behind entering an option spread.… Read more.
Search Results for: options
Why Trade Spread Options?
This article was originally published on June 17, 2005. Many traders are attracted to options on commodities. They typically prefer the limited risk–premium paid plus commission and fees–and unlimited profit potential features that are exclusive to buying long options outright. The problem with buying options outright, however, is that many traders buy out-of-the-money options because… Read more.
How to Use Options in a Volatile Market Climate
This article originally appeared in FutureSource’s Fast Break Newsletter on December 16, 2005. Today’s volatile markets offer many opportunities. Along with these opportunities come risks. The greater the volatility in a market, the bigger the risk. Many savvy investors are drawn to the options markets as a way to take advantage of large price swings… Read more.
Locking in Profit by Purchasing Options
One of the most common things you’ll hear a futures trader say is, “Make sure you lock in profits with stops!” One thing some traders don’t realize is that you can lock in profits with options as opposed to using just a stop loss order. This article will focus on how locking in profits is… Read more.
Hedging by Purchasing Options: A Margin Free Way of Risk Management
Talk with any hedger and they’re sure to tell you about an experience with trading on margin. Margin is a good faith deposit that a hedger must have in their account in order to initiate a long or short futures position. For example, the margin on a corn contract is currently $2,362.00. This means that… Read more.
Options on Futures: An Introduction to Buying Options
This post originally appeared in FutureSource’s Fast Break Newsletter, where Drew Wilkins is a regular contributor on various futures trading topics. One of the most common questions a futures broker gets is, “How do options on futures work?” The truth is, options can be as simple or complex as you want them to be. This… Read more.
Forget What You Thought You Knew About Buying Futures Options
This is a revised version of an article that originally appeared in FutureSource’s Fast Break Newsletter on September 24, 2004. Have you purchased an option position in the past, and had the market move in your favor, only to ultimately lose money on the trade? Read this article and you might get some answers about… Read more.
Futures Options: Using a Delta Neutral Trading Strategy
Many traders are constantly looking for a way to manage risk. Employing a delta neutral trading strategy can help to manage exposure to the markets. This type of strategy will allow speculative traders to hedge their positions against adverse price movements.
Eurex Index Futures: A Liquid Global Marketplace
Stock traders, investors, and hedgers have long known the value of stock index futures. Traders can access exposures to an entire country’s equity markets or a specific sector within it through various stock index futures benchmarks. Just as an investor can access the broad U.S. market through various iterations of the S&P 500 futures, the… Read more.
The End of an Era for the Euro
If you started trading in the last two decades, you’ve only known a world in which the euro is worth more than the US dollar. You’d have to go all the way back to 2002 to find data points representing the EUR/USD conversion rate that start with a zero to the left of the decimal point.
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