Trading Options
 

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Trading Options

Trading options can represent the best as well as the worst of commodities trading. Trading options can allow the investor to make great profits. It can also lead to disastrous results if he or she doesn’t stay with a proven trading plan. No matter what you know, it is always good to have an introduction to trading options.

Definition Of Trading Options
Options are legal agreements that give their buyers the right, not the obligation, to purchase the underlying assets at a future date. Whether it is the NASDAQ 100 or corn futures, trading options allows the investor to invest in these assets with a number of different investment strategies.

Hedging and Speculation
While other reasons also exist, the two main reasons for trading options are hedging and speculation. Each has a different investment philosophy as well as techniques for trading it. Before attempting either strategy, it is important to understand the differences between them and incorporate the one that you want to pursue into your trading rules.

Hedging
When you purchase commodities in an attempt to offset a potential downturn, you are hedge fund investing, or hedging. Hedging in like an insurance policy that protects the investor in the event of a negative price movement for a commodity. By trading options, you are able to reduce the potential downside of your commodity trading while still receiving the full benefits of investing. The beauty of this is that you limited your risk while preserving your profit potential.

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Trading Options Presentation Transcript

  • 1. www.CandlestickForums.comwww.CandlestickForums.com TradingTrading OptionsOptions
  • 2. www.CandlestickForums.comwww.CandlestickForums.com Trading options can represent the best asTrading options can represent the best as well as the worst of commodities trading.well as the worst of commodities trading.
  • 3. www.CandlestickForums.comwww.CandlestickForums.com Trading options can allow the investor toTrading options can allow the investor to make great profits.make great profits.
  • 4. Before We Continue…Before We Continue… Click the links below to get yourClick the links below to get your FREE training materials.FREE training materials. Free Weekly Investing WebinarsFree Weekly Investing Webinars Don’t miss these free training events!Don’t miss these free training events! http://www.profitableinvestingtips.com/free-webhttp://www.profitableinvestingtips.com/free-web Forex Conspiracy ReportForex Conspiracy Report Read every word of this report!Read every word of this report! http://www.forexconspiracyreport.comhttp://www.forexconspiracyreport.com
  • 5. www.CandlestickForums.comwww.CandlestickForums.com It can also lead to disastrous results if he orIt can also lead to disastrous results if he or she doesn’t stay with a proven tradingshe doesn’t stay with a proven trading plan.plan.
  • 6. www.CandlestickForums.comwww.CandlestickForums.com No matter what you know, it is always goodNo matter what you know, it is always good to have an introduction to trading options.to have an introduction to trading options.
  • 7. www.CandlestickForums.comwww.CandlestickForums.com Definition Of Trading OptionsDefinition Of Trading Options
  • 8. www.CandlestickForums.comwww.CandlestickForums.com Options are legal agreements that give theirOptions are legal agreements that give their buyers the right, not the obligation, tobuyers the right, not the obligation, to purchase the underlying assets at a futurepurchase the underlying assets at a future date.date.
  • 9. www.CandlestickForums.comwww.CandlestickForums.com Whether it is the NASDAQ 100 or cornWhether it is the NASDAQ 100 or corn futures, trading options allows the investorfutures, trading options allows the investor to invest in these assets with a number ofto invest in these assets with a number of different investment strategies.different investment strategies.
  • 10. www.CandlestickForums.comwww.CandlestickForums.com Hedging and SpeculationHedging and Speculation
  • 11. www.CandlestickForums.comwww.CandlestickForums.com While other reasons also exist, the two mainWhile other reasons also exist, the two main reasons for trading options are hedgingreasons for trading options are hedging and speculation.and speculation.
  • 12. www.CandlestickForums.comwww.CandlestickForums.com Each has a different investment philosophyEach has a different investment philosophy as well as techniques for trading it.as well as techniques for trading it.
  • 13. www.CandlestickForums.comwww.CandlestickForums.com Before attempting either strategy, it isBefore attempting either strategy, it is important to understand the differencesimportant to understand the differences between them and incorporate the onebetween them and incorporate the one that you want to pursue into your tradingthat you want to pursue into your trading rules.rules.
  • 14. www.CandlestickForums.comwww.CandlestickForums.com HedgingHedging
  • 15. www.CandlestickForums.comwww.CandlestickForums.com When you purchase commodities in anWhen you purchase commodities in an attempt to offset a potential downturn, youattempt to offset a potential downturn, you are hedge fund investing, or hedging.are hedge fund investing, or hedging.
  • 16. www.CandlestickForums.comwww.CandlestickForums.com Hedging in like an insurance policy thatHedging in like an insurance policy that protects the investor in the event of aprotects the investor in the event of a negative price movement for a commodity.negative price movement for a commodity.
  • 17. www.CandlestickForums.comwww.CandlestickForums.com By trading options, you are able to reduceBy trading options, you are able to reduce the potential downside of your commoditythe potential downside of your commodity trading while still receiving the full benefitstrading while still receiving the full benefits of investing.of investing.
  • 18. www.CandlestickForums.comwww.CandlestickForums.com The beauty of this is that you limited yourThe beauty of this is that you limited your risk while preserving your profit potential.risk while preserving your profit potential.
  • 19. www.CandlestickForums.comwww.CandlestickForums.com Hedging can be done by investing in stable,Hedging can be done by investing in stable, commodities to offset any potential lossescommodities to offset any potential losses in more speculative endeavors.in more speculative endeavors.
  • 20. www.CandlestickForums.comwww.CandlestickForums.com In addition, it can be done as a separateIn addition, it can be done as a separate investment on an existing commodityinvestment on an existing commodity investment; by having a second, opposinginvestment; by having a second, opposing investment, it is possible to minimize anyinvestment, it is possible to minimize any potential losses in the first position.potential losses in the first position.
  • 21. www.CandlestickForums.comwww.CandlestickForums.com SpeculationSpeculation
  • 22. www.CandlestickForums.comwww.CandlestickForums.com When trading options, speculation is like theWhen trading options, speculation is like the opposite of hedging.opposite of hedging.
  • 23. www.CandlestickForums.comwww.CandlestickForums.com While hedging is a defensive investingWhile hedging is a defensive investing strategy, speculation is purely an offensivestrategy, speculation is purely an offensive one.one.
  • 24. www.CandlestickForums.comwww.CandlestickForums.com Speculation can be looked at as a bet by theSpeculation can be looked at as a bet by the investor on the price movement.investor on the price movement.
  • 25. www.CandlestickForums.comwww.CandlestickForums.com The interesting part of trading commoditiesThe interesting part of trading commodities in this manner is that not only can youin this manner is that not only can you make money when the market goes up,make money when the market goes up, but you can profit when it goes down orbut you can profit when it goes down or even sideways.even sideways.
  • 26. www.CandlestickForums.comwww.CandlestickForums.com To be successful you must correctly analyzeTo be successful you must correctly analyze the direction of the movement as well asthe direction of the movement as well as the amount it will move.the amount it will move.
  • 27. www.CandlestickForums.comwww.CandlestickForums.com Given the fact that speculation can be veryGiven the fact that speculation can be very risky why would you want to do it?risky why would you want to do it?
  • 28. www.CandlestickForums.comwww.CandlestickForums.com Two reasons come to mind.Two reasons come to mind.
  • 29. www.CandlestickForums.comwww.CandlestickForums.com First, you have at your disposal at greatFirst, you have at your disposal at great deal of versatility.deal of versatility.
  • 30. www.CandlestickForums.comwww.CandlestickForums.com There are many different investment optionsThere are many different investment options for trading options at your disposal tofor trading options at your disposal to employ.employ.
  • 31. www.CandlestickForums.comwww.CandlestickForums.com Second is leverage; by being able to controlSecond is leverage; by being able to control 1,000 barrels in one oil futures contract,1,000 barrels in one oil futures contract, you have a tremendous profit potential.you have a tremendous profit potential.
  • 32. www.CandlestickForums.comwww.CandlestickForums.com These reasons combine to make tradingThese reasons combine to make trading options an excellent investmentoptions an excellent investment opportunity.opportunity.
  • 33. www.CandlestickForums.comwww.CandlestickForums.com Help with your tradingHelp with your trading
  • 34. www.CandlestickForums.comwww.CandlestickForums.com As with any type of investing, it is importantAs with any type of investing, it is important to follow the steps for successful trading,to follow the steps for successful trading, including establishing a trading systemincluding establishing a trading system and performing technical analysis.and performing technical analysis.
  • 35. www.CandlestickForums.comwww.CandlestickForums.com While understanding how to trade is critical,While understanding how to trade is critical, putting your plan into action and followingputting your plan into action and following it is more important.it is more important.
  • 36. www.CandlestickForums.comwww.CandlestickForums.com With a solid plan and the research to back itWith a solid plan and the research to back it up, you substantially improve your oddsup, you substantially improve your odds for success.for success.
  • 37. www.CandlestickForums.comwww.CandlestickForums.com Understanding optionsUnderstanding options
  • 38. www.CandlestickForums.comwww.CandlestickForums.com Trading options is an excellent way toTrading options is an excellent way to accumulate wealth.accumulate wealth.
  • 39. www.CandlestickForums.comwww.CandlestickForums.com It is important to understand the approachIt is important to understand the approach that you wish to take and follow thatthat you wish to take and follow that method, whether you are hedging ormethod, whether you are hedging or speculating.speculating.
  • 40. www.CandlestickForums.comwww.CandlestickForums.com By understanding about trading options youBy understanding about trading options you will be able to implement your plans andwill be able to implement your plans and confidently follow them, giving you theconfidently follow them, giving you the opportunity to be a successful trader in theopportunity to be a successful trader in the futures market.futures market.