Talking about futures options trading and options trading strategies, there are many ways for you to incorporate the strategies into your portfolio. Among of them, some strategies are more straight forward than others. Since you are there in this trading floor for earning, you may want to stick to long options trading strategies. Why so? As the buyer the risk will be the premium money you pay up front to own the option. To sum up the topic we will mention, today just have a review on simple strategies to learn option trading
To incorporate options into your trading, there is a simplest way with straight options trading strategies. It’s up to your particular trading strategy, you can buy a call on a futures market which you think is moving or may move higher. Also, in the contrast way, you may buy a put on a market you think is moving or will move lower. Using your knowledge about options, you can look at a market and know that you will probably have to pay more for an option that is at or in-the-money. About out-of-the-money options trading strategies, they will be priced based on how likely it is that they will be in-the-money at or before expiration of the option contract.
Another tips for you is that if the futures market moves in the direction of your option’s strike price, or moves through it, you can exercise your right on that contract and offset the resulting position with a futures market transaction and possibly collect a profit. Read the point again if you find it confused. Just make sure that you can understand all for a good start. If the market does not reach or trade through your option’s price, it will expire worthless and you have, in effect, forfeited the premium. You can also sell an option prior to expiration for more or less premium than you paid. Exiting, writing or selling options can also be an important part of the planning of your options trading strategies.
There are still more option spreading techniques that are worth learning how to identify and trade. Bull spreads and bear spreads are well known options trading strategies. Have you ever known about these terms? Back to the topic, the idea behind these option trading strategies is that the sale of a further from the money option will offset some of the initial cost of your option. It will put a ceiling on your profit potential but it does take some money off the table when you are trying for a particular directional move in the futures trading market.
The last words in today post I would like to remind you that trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Despite where you are now, learning is still needed. Don’t miss any information or knowledge that can support your trading!