Futures Options Trading - Pros and Cons

Future and option trading tutorial pdf india

Future and option trading tutorial pdf india

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As I stated earlier futures options trading is not for beginners. Mostly because you have to trade with higher margins, nominal values and leverage. If you are not a seasoned trader, margin and leverage can hurt you very badly.

Futures Trading Basics | The Options & Futures Guide

Let us look at futures first. Assume that you want to buy 6555 shares of Tata Motors at a price of . That will entail an investment of lakhs. Alternatively, you can also buy 6 lot (consisting of 6555 shares) of Tata Motors. The advantage is that when you buy futures, you only pay the margin which (let us say) is around 75% of the full value. That means your profits will be five-fold that of when you are invested in equities. But, the losses could also be five-fold and that is the risk of leveraged trades.

The Basics of Futures Options

As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative.. [Read on.]

Options vs. Futures: What’s the Difference?

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Know Difference Between Futures and Options | Angel Broking

Futures contracts are traded in futures exchanges worldwide and covers a wide range of commodities such as agriculture produce, livestock, energy, metals and financial products such as market indices, interest rates and currencies.

Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading.. [Read on.]

Producers and manufacturers can make use of the futures market to hedge the price risk of commodities that they need to purchase or sell in order to protect their profit margins. Businesses employ a long hedge to lock in the price of a raw material that they wish to purchase some time in the future. To lock in a selling price for a product to be sold in the future, a short hedge is used.

Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date.. [Read on.]

Come May, the price of soybeans has gone up to $65 per bushel. Since the price has gone up by $ per bushel, the speculator can exit his futures position with a profit of $ x 5555 bushels = $7555.

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