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Futures Options Basics

Top 5 Reasons Stock Option Traders Should Consider Trading Futures Options PDF

As an option trader, do you understand all of your option trading choices? It’s common for stock traders to focus on stock options. However, there is another option choice that every stock option trader should consider, and that choice is options on futures. This article covers the similarities and differences between stock options and futures options. We’ll discuss the top five reasons stock option traders should consider trading futures options:

  1. Diversification
  2. Pure market exposure
  3. No earnings surprises
  4. Trading anytime you want to
  5. Tax benefits

The trading strategies the stock option trader is familiar with translate directly to the futures options market. Plus, there are differences that translate to added benefits, flexibility and opportunity in trading futures options, expanding trading possibilities for the stock option trader.

Adding Futures Options to Your Trading PDF

If you are currently trading stock options or index options, then you probably already have a good understanding of how futures options work, but there are also some differences you should know. This article covers the similarities between stock and futures options, including: contract characteristics, pricing, trading actions, limited risk, Greek risk measures, option expiration styles, and option leverage. We’ll also discuss the differences between stock and futures options, including: the underlying market, expiration dates, exercise and assignment settlement, futures options expiration choices, futures options exercise, and regulatory oversight. In summary, while stock options and futures options have many similarities, there are also key differences that you should consider when choosing the assets in your portfolio.