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What is the difference between investing in the stock market and futures and options trading?
Wiki User
∙ 14y ago
Options and futures are derivatives of Stocks.
This means that options and futures derive their value from the stock that they are based on.
For a simplistic explanation, a call option with a strike price of $10 gains $5 in value when its underlying stock rises by $5 above $10. If the stock does nothing, then no value is gained.
As such, buying options or futures isn't the same as buying the stock itself because by owning these derivative instruments, you do not own the stocks they are based on.
Wiki User
∙ 14y ago
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What is F and O investing?
i thinfk it has to dowith futures and options trading
What are my options when it comes to investing?
There are huge numbers of options. You can invest in stocks, bonds, real estate, futures, etc. Here's a site to get started: http://beginnersinvest.about.com/
Where can one read reviews about Gold Futures and Options?
You can read reviews about Gold Futures and Options on financial websites like Investing.com, The Wall Street Journal, or Bloomberg. You can also check out forums and discussion boards dedicated to trading and investing to see what other investors have to say about their experiences with Gold Futures and Options.
What are the differences between future and option contract?
There's one main difference and it's huge: An option contract gives the person who buys it the privilege of doing whatever it is the contract is written for. A futures contract imposes an obligation on the buyer. There are also liquidity requirements and requirements to pay performance bonds in futures trading that don't exist in options trading, but the real basic difference is that an options buyer can do something and a futures trader has to.
What are commodities futures options used for?
Grain farmers use commodities futures options for getting their products on the market. Without commodities futures options, farmers would have a tough time selling their products.
What does the phrase cash for settlement refer to?
The phrase "cash for settlement" refers to sellers who do not wish to take actual possession of a commodity. It is a more convenient method of transacting futures and options contacts. E.g. if you purchased cotton futures that are cash settled, instead of taking possession of the actual cotton, it pays the difference between the spot price of the cotton and the futures price.
Why are futures and options risky investments?
Futures and options are no more risky than equities, bonds, or foreign exchange trades. Futures are a standardized contract between two parties to buy or sell a specified asset at its current price at a specific date in the future. An option is the same thing, but without the obligation to buy.
What is a commodity futures trading brokers?
Commodity brokers specializing in futures and options trading offer charts, futures quotes,options prices, news, margin rates and advice. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial derivatives.
What does futures trading involve?
It involves investing in business and the stock market.I would be careful in what you invest your money in and who you invest your money with. don't get scammed like people did with bernie madeoff.
What has the author Wm Grandmill written?
Wm Grandmill has written: 'Investing in wheat, soybeans, corn' -- subject(s): Charts, diagrams, Prices, Commodity options, Commodity futures, Wheat, Corn, Grain, Soybean
What has the author Joseph D Koziol written?
Joseph D. Koziol has written: 'A handbook for professional futures and options traders' -- subject(s): Commodity exchanges, Financial futures, Futures, Option (Contract), Options (Finance)
Where can one find information about the website futures options?
There is a website called Gofutures, and they have information on futures options. The site has demos, charts, and graphs to show all the information.
