Options from 500
Traders can also sell Call Options if they believe that the price will drop. Traders can also sell Put Options if they believe that the price will rise.
The Bottom Line For most people, learning about stock options is like learning to speak a new language, which requires wrestling with totally unfamiliar terms. But if you already have some experience with stock options, understanding the language of options on futures becomes easy.
In fact, basic concepts such as deltatime valueand strike price apply the same way to futures options as to stock options, except for slight variations in product specifications, essentially the only hurdle to get passed. If you've ever studied a second language, you know how hard it can be to get your head around something new.
But once you learn, say, Spanish as a second language - learning Italian as a third could be so much easier since both have in common Latin roots. To get facility with Italian as a third language, you would need only to grasp minor changes in word forms and syntax.
Well, the same could be said for learning about futures and options. Stock Index Options on Futures The first thing that probably throws a curveball at you when initially approaching options on futures is that you may not be familiar with a futures contractthe underlying instrument upon which options on futures trade.
Recall that for stock options, the underlying is the equity issue e. Since most investors understand how to interpret stock prices, figuring out the underlying is easy.
This article will hopefully interest you in exploring these exciting markets and new trading opportunities. Although these are cash-based futures options i.
You want options from 500 buy low and sell high.
Differences and Characteristics There is, however, a key difference between futures and stock options. Volatility and time-value decay also play their part, just like they affect a stock option.