Futures trading is a popular type of trading in the financial market for its high yield returns. However, it is a risky business to invest in if you do not have a solid understanding of technical analysis and hedging strategies to mitigate risk. One such risk management strategy is futures options. It allows traders to buy or sell assets at a pre-determined price at a future date. This article provides a comprehensive guide to futures options (선물옵션) trading.
Futures options trading is a contract in which buyers have the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specific period. Unlike stock options, which control only 100 shares of the underlying asset, futures options typically control an entire underlying futures contract on a particular commodity or security index.
There are two types of futures options: call options and put options. A call option gives the buyer the right, but not the obligation, to buy the underlying asset at the strike price, while a put option gives the buyer the right, but not the obligation, to sell the underlying asset at the strike price. When you purchase an option, you pay a premium for the right to buy or sell an asset at a future date.
Options traders have to determine the strike price and the expiration date of the options they want to buy or sell. The strike price is the predetermined price at which the option buyer has the right to buy or sell the underlying asset. The expiration date is the date on which the option contract expires. Options traders also need to consider the implied volatility of the underlying asset, which affects the price of the option premium.
Futures options trading has various strategies to hedge risk. One such strategy is the ‘hedging strategy’ where traders can use options contracts to limit their risk to a set maximum. This strategy is useful when an underlying asset has a lot of volatility or unexpected news events can cause a sudden price drop. Another strategy is the ‘spreads strategy,’ where traders buy a call option at one strike price and sell a call option at another strike price. This strategy reduces the overall premium cost of the option while also helping the trader to manage risk.
It is important to note that futures options trading is not suitable for all investors. With high leverage, traders can quickly lose their investment capital if they do not understand how options trading works or how to implement risk management strategies effectively.
Futures options trading is a risk management strategy that traders use to buy or sell underlying assets at a predetermined price within a specific period. Understanding how futures options work, their types, and strategies to mitigate risk is essential to becoming a successful futures options trader. Before investing in futures options trading, take the time to educate yourself on how to mitigate risk and use options contracts to your advantage. Happy trading!