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Go With Futures Options Trading to Get High Yields

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  • Go With Futures Options Trading to Get High Yields

    Binary options trading is a kind of online trading that involves speculating the direction of commodities, stocks, futures, index, and currencies. It is quite similar to Forex trading in that commodities are traded, regardless of whether they are rising or falling. With this kind of trading, you have a very efficient and easy way to make a lot of money in a matter of one hour or a couple of weeks, depending on your choice of trading time. Trading here is done using a broker just like it is in the Forex and stock market.

    In futures options trading, investors make money by anticipating changes in commodity prices. Commodities are items traded on an exchange and are the same no matter what their source is. Futures options trading, therefore, are investment securities that provide their owners with the right to buy commodity futures such as gold, paper, or a foreign currency at a specified price.

    There are two main types of futures options trading to be aware of: calls and puts. You would only buy a call option if you believe that the underlying futures price will move higher. For example, if you expect corn futures to move higher, you will want to buy a corn call option. The opposite of this is a put option. You only buy a put option if you believe that the underlying futures price will move lower. For example, if you expect soybean futures to move lower, you will want to buy a soybean put option.

    When you buy into this kind of option, there is a price that needs to be paid. The term used for the price of an option is called a premium. You can think of options pricing as betting. The bigger the long shot, the less expensive is the option. On the other hand, the more sure you are about your option, the more expensive it will be.

    The strike price is the price you could buy or sell the underlying futures contract. It's important to make a distinction between futures options and futures contract. A futures option is a financial tool that allows an investor the right to purchase a futures contract for a particular commodity. In direct contrast, a futures contract is a contractual obligation to purchase the commodity itself, in a specific quantity, for a specific price and at a certain time.

    With binary options trading, you don't have to be so much of a financial expert. Unlike other types of trading where you have to master complex calculations and have insider information, all you need to know is whether you think the price of an asset will go up or down. There is also a decreased level of risk during a trade.

    Once you enter into a contract, you will know exactly how much capital you are risking and how much you stand to gain. Feel confident every time you engage in futures options trading simply because you do not have to come up with an exit strategy because the contract length is determined before you even enter into a trade.


    Article Source: http://EzineArticles.com/6336535
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