Futures and options trader

The chapter also touches upon leverage calculation. This chapter gives you all the necessary information that you need to know before placing your first futures trade. The chapter also throws light into why brokers and exchanges charge margins.

This chapter gives you an overview of how to use a margin calculator. In addition the chapter also touches upon spread trading such as calendar spreads. The chapter explains all that you need about shorting, be it futures or stocks with practical real life examples.

Emphasis is also made on things you need to take care of when you short stocks or futu.. This chapter is a primer on trading Nifty Futures. All that you need to know about Nifty futures is discussed in this chapter including the impact cost, liquidity, and benefits of trading Nifty future.. This chapter is a primer on how future contracts are priced with respect to the spot prices. The chapter also discusses the concept of premium, discount, and the convergence of futures and spot price..

Remember the option is only going to be as stable as the futures contract that the option represents. Volatility is basically reflected in the sharp rises and drops in option premiums, and the degree of fluctuation that those premiums experience. If you use it right, volatility can be your best friend. Once you understand a little about market psychology, you can truly exploit volatility to create some serious profits in a relatively short period of time.

Before I get sidetracked, let me mention the fact that there are two types of volatility in commodity options trading and really all options trading for that matter: In other words, how stable or unstable have market prices been throughout history? The basic reason why it is important to understand volatility is because it will tell you what your best plan of action is, as far as what type of position to take in the markets.

In the realm of commodity options trading , you have to be prepared to face the uncertainties and volatility that the futures markets can throw at you. You have to keep in mind that options is simply a game of educated guesses. It is vital for you to make that distinction before even beginning to enter a trade.

The options markets are inherently speculative. The whole drama of it is the big question mark about what the markets may or may not do. This is where you get volatility skews and parity in puts and calls. This is why option writers pad their premiums the farther out in months the options go, because they realize that the farther the timeline extends, the more probability there is for uncontrollable events to affect market prices.

Chart confirms that a short term counter trend move is underway. When this action is over look for the longer term positive trend to resume. Uptrend with money management stops. Chart confirms that a strong downtrend is in place and that the market remains negative longer term.

Strong Downtrend with money management stops. A triangle indicates the presence of a very strong trend that is being driven by strong forces and insiders.