A disciplined business

Article Abstract:

Trading in options is different from trading in ordinary stocks due to the limited life of the option. Options see a drop in value over time if no other factors change. Volatility can affect the value of options. Contracts equivalent to 1,000 options are used for options trading, and dealing costs tend to involve a minimum flat rate commission and a levy for each contract to pay for settlement charges. Not all brokers offer optiosn trading, which is simpler if one is already a client of the broker.

Financial Transactions Processing, Reserve, and Clearinghouse Activities, Security & commodity services, not elsewhere classified, Options Clearing, Options clearinghouses

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Stick with the market you know best

Article Abstract:

Investors are faced with a wide range of choices in the derivatives market and should leave futures and commodities for professional investors. Selection of options involves investors assessing the level of risk they are prepared to take. High risk investments may bring good returns while safer options are more likely to retain value. The volatility of the shares involved should also be taken into account. Collective investment vehicles geared to this market are also available for investors.

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Fitting options into your investment strategy

Article Abstract:

Futures are best left to professional investors, while options are best suited to individuals. Futures involve agreeing to sell or buy commodities or instruments, while options involve having the right to buy or sell such commodities or instruments. Options only last for a limited time, and this reduces their value as time goes by. Options can be used to manage risk for holders of shares who feel their value could drop, and who do not want to sell those shares.

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