Options Strategies - Advanced Technical Analysis - Technical Analysis Education Resources for Stock, Futures, Forex Trading

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Options Strategies

Sunday, 20 July 2008

Options Strategies

Option on Futures

Options on futures contracts have added a new dimension to futures trading. Like futures, options provide price protection against adverse price moves. Present-day options trading on the floor of an exchange began in April 1973 when the Chicago Board of Trade created the Chicago Board Options Exchange (CBOE) for the sole purpose of trading options on a limited number of New York Stock Exchange-listed equities. Options on futures contracts were introduced at the CBOT in October 1982 when the exchange began trading Options on U.S. Treasury Bond futures.

Options Basics

If you are new to options trading, this section will define what options are and explain the most basic concepts. It is important that you understand these basic concepts and terminology before you get into the more advanced topics, which are much more interesting (and profitable).
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Trading Basics: Using the leverage of options

Options are mostly misunderstood but are a very important tool that the average investor could use to enhance their returns. Basically, options are a negotiable instrument, can be traded, that give the buyer the right, but not the obligation, to buy(call) or sell(put) the underlying stock (or futures contract) at a specified price until their expiration. In other words, options are tradable insurance contracts. An investor can purchase an option as insurance against decline in the stock or a rise in the stock. There are many ways to trade options, some are very complicated, but only the basic methods are outlined here.