what is the difference between trading in Options and Futures?
An option is the right but not the obligation to do something. If you buy a call you have the right to buy the futures contract later at a fixed price if it makes sense to do so. Otherwise you can legally walk away and be out only what you paid for the option in the first place. If you bought the future directly, and it went up, great. But if it went down, you would be responsible for the loss.
where can i find a free simple trading system for futures or options?
I recommend OptionsXpress.com as they have an intuitive user interface and fast execution.
what do you mean by the term futures &options in share trading?
Terminology used in forwarding trading
please someone explain me in detail or give link to websites where i can learn about futures n options trading
Firstly I would recommend wikipedia. Then I would recommend looking at Omnitrader and also Dorseywright.com. These should point you in the right direction.
However by far the most comprehensive way of learning this is buying a book called ‘Come into my trading room’ (ISBN 0471225347). It is published by Wiley Financial and has everthing you need. Very easy to find on Amazon.
Also there is a guy called Bernie Schaeffer who does a CD-Rom course that is quite good. I have not seen it myself but from looking at his site it seems reliable.
LIFFE and Eurex Futures/Options?
Do exchange traded futures and options have ISIN numbers?
Yes
What is the meaning of Futures and Options in Share Trading?
In their simplest form, stock options are a contract between two parties that expires at an agreed-upon time in the future. The contract purchaser is buying the right, but not the obligation, to buy (a "call" option) or sell (a "put" option) an asset (the "underlying") at a specific price, on or before the agreed-upon date. The contract seller is accepting the obligation to take the other side of the transaction.
The earliest known options trade dates from 7th century BCE. Thales of Miletus speculated that the year’s olive harvest would be especially bountiful, and put a deposit on every olive press in his region of Greece. The harvest was huge, demand for olive presses skyrocketed, and Thales sold his rights, or options, to the presses at substantial profit. The modern history of stock options trading begins with the 1973 establishment of the Chicago Board Options Exchange (CBOE) and the development of the Black-Scholes option pricing model.
Stock options are defined by several key characteristics. The expiration date specifies when the option contract becomes null and void. The underlying is the asset upon which the stock option is based. The strike price, or exercise price, is the price at which the underlying asset will be bought or sold should the option holder decide to exercise their right to buy or sell. European-style stock options are only exercisable on the expiration date; American-style stock options are exercisable at any time before the expiration date.
An ATM, or at-the-money option, is one where the strike price is roughly the same as the current underlying price. An OTM, or out-of-the-money option, is one where the underlying price is far enough away from the strike price that there is no incentive for the holder to exercise the contract. Conversely, an ITM, or in-the-money option, is one where the holder can exercise the option profitably.
The simplest stock options trading strategy is to buy an OTM call (or put) option if the expectation is for a dramatic increase (or decrease) in the price of the underlying. Spreads involve buying one option and selling another; they are often used to lower the initial cost of the position at the expense of lower maximum potential profit. Examples of spreads are verticals, backspreads, bull and bear spreads, ratio spreads, butterflies, and condors.
Stock options allow speculators to make bets on market movement without having to pick an up or down direction. For example, buying both an ATM put and an ATM call would give the holder exposure to a dramatic move in either direction. Because of this, stock options traders are often said to be trading volatility rather than price.
Futures are a financial derivative known as a forward contract. A futures contract obligates the seller to provide a commodity or other asset to the buyer at an agreed-upon date. Futures are widely traded for commodities such as sugar, coffee, oil and wheat, as well as for financial instruments such as stock market indexes, government bonds and foreign currencies.
The earliest known futures contract is recorded by Aristotle in the story of Thales, an ancient Greek philosopher. Believing that the upcoming olive harvest would be especially bountiful, Thales entered into agreements with the owners of all the olive oil presses in the region. In exchange for a small deposit months ahead of the harvest, Thales obtained the right to lease the presses at market prices during the harvest. As it turned out, Thales was correct about the harvest, demand for oil presses boomed, and he made a great deal of money.
By the 12th century, futures contracts had become a staple of European trade fairs. At the time, traveling with large quantities of goods was time-consuming and dangerous. Fair vendors instead traveled with display samples and sold futures for larger quantities to be delivered at a later date. By the 17th century, futures contracts were common enough that widespread speculation in them drove the Dutch Tulip Mania, in which prices for tulip bulbs became exorbitant. Most money changing hands during the mania was, in fact, for futures on tulips, not for tulips themselves. In Japan, the first recorded rice futures date from 17th century Osaka. These futures offered the rice seller some protection from bad weather or acts of war. In the United States, the Chicago Board of Trade opened the first futures market in 1868, with contracts for wheat, pork bellies and copper.
By the early 1970s, trading in futures and other derivatives had exploded in volume. The pricing models developed by Fischer Black and Myron Scholes allowed investors and speculators to rapidly price futures and options on futures. To supply the demand for new types of futures, major exchanges expanded or opened across the globe, principally in Chicago, New York and London.
Exchanges play a vital role in futures trading. Each futures contract is characterized by a number of factors, including the nature of the underlying asset, when it must be delivered, the currency of the transaction, at what point the contract stops trading, and the tick size, or minimum legal change in price. By standardizing these factors across a wide range of futures contracts, the exchanges create a large, predictable marketplace.
Futures trading is not without significant risk. Because futures contracts generally entail high levels of leverage, they have been at the heart of many market blowups. Nick Leeson and Barings Bank, Enron and Metallgesellshaft are just a few of the infamous names associated with futures-driven financial disasters. The most famous of all may well be Long Term Capital Management (LTCM); despite having both Fischer Black and Myron Scholes on their payroll, both Nobel Laureates, LTCM managed to lose so much money so rapidly that the Federal Reserve Bank of the United States was forced to intervene and arrange a bailout to prevent a meltdown of the entire financial system.
In the United States, futures transactions are regulated by the Commodity Futures Trading Commission.
Is it possible to trade futures and options with stop loss as in stocks?
yes, we can use stop loss.
How does the trading in Futures and Options takes place???
How does the trading in Futures and Options takes place???
Almost all Options and Futures in the U.S. are traded through the following exchanges.
Chicago Board Options Exchange – CBOE
Chicago Board Of Trade – CBOT
Chicago Mercantile Exchange – CME
Here is the Definition of an Option from investorpedia.com
A privilege sold by one party to another that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon price during a certain period of time or on a specific date.
Definition of Futures
An auction market in which participants buy and sell commodity/future contracts for delivery on a specified future date. Trading is carried on through open yelling and hand signals in a trading pit.
Trading stocks,futures, and options for a living?
Well I am in high school and love to trade. I am not a good student so i know im not going to be a doctor,lawyer and that stuff. I am a junior and have been investing/trading futures stocks and options for over 3 years now with great results. I don’t think its luck because i do use a strategy and a good one i kind of created from all the other pundits strategies and just experience. I am a discretionary trader. So i decided that i want to do this at home being self employed for a living. My questions are how many other people make a career doing this? Are they successful (millionaires)? My guidance and I talked about it and she even agreed a lot of trader drop out of HS or college and make millions! I have read a ton of books and i KNOW my strategy works in bull and bear markets last year year before that i made money and even this read after taking a 20% draw down i came back with my high for the year! I can control my emotions which is important in this business from what i hear. I have instinct i can just Sense when a stocks going to move and even if im wrong i cut my losses! I use stop limit orders, trailing stops and limit orders to execute my trades. So is this a smart decision? to pursue a dream life of trading??? Me i just want a nice mansion in NJ nice cars cloths etc. and a lot of traveling around the world.
ok i read security analysis and the intelligent investors and i must say graham is too old school those methods just dont work anymore dude… trading makes money daytrading makes even more quick cash. bottom line i know how to invest but investing is pointless unless you have over 50 million to invest it willl take you forever to get 50 Mil investing like graham and buffet just isnt in my interest..
thanks but you know its interesting because i did this personalilty test in career ed in high school and the thing i got got me really happy yet weird approx. only 1% of the american population scored it its perfectionist.. it also said most likly to become a millionaire and a good career would be analyst or trader sooo yeah the fact that ive been wanting to do this for many years and just last year i took this test and got that motivated me and this year is by far my best year! i come from a very poor country and stuff soo that i have this chance i have to take it ya know? and im used to living with little money which always helps ! i am also well aware that some traders lose maybe 80% in just weeks or months but they make it back its the traders who stick with it who make the big bucks in the long run… however even during this crash i only lost 20% despite being fully invested because i use trailing stops or stop loss orders… to help prevent from losing profits … i can make it
ya know the funny thing everyday that i skip school to trade stocks i make a lot of money! a lot more than i would being in school hahaha sure im missing earth science and language arts and math but im making more money than some students do their entire year working part time hahahaha
and i usually read 2 or 3 books a month.. on investing or trading im learning both things because i know once you reach a certain level you cant just trade all the time you have to invest..
The answer is…. yes you can!!!!!
The "details" are…… it takes hard work & discipline.
To get a "feel" of trading;
Mastering The Trade, John Carter
Trading In The Zone, Mark Douglas
(try to commit to reading one trading book per month)
Three great web sites to check out everyday;
www.alphatrends.net
www.tradingwithTK.com
www.slopeofhope.com
Other sites;
https://www.thinkorswim.com/tos/displayPage.tos?webpage=onlineSeminar&displayFormat=hide
http://www.redoption.com/shadow_video_archive.php?time_sort=entire&ch=467
http://www.redoption.com/
http://www.optionplanet.com/
https://www.thinkorswim.com/
Good luck;
ya@ErieStockTrader.com
How futures and options are traded in BSE and NSE?With a simple example?
Hi,
How the futures and options are traded at BSE and NSE? How it’s affecting BSE and NSE indexes? How it affects INR appreciation?
One takes the lot of share with very little margin.If the Price goes upo then you make profits But otherwise you are doomed. In this fall close friends of mine have lost 1 Crore each , so my advise is Do not even think about this