Options University Courses

Future option trading is involved in customization of the contract between two parties to buy or sell a certain quantity of certain commodity at a specified price on a specified future date. Most of the times, they called it "forward contract" as in options trading world.

Futures being traded on exchanges have terms standardized by the exchange. The standardized items in any futures contract are:-

- The quantity of the underlying product
- Quality of the underlying product (not required in financial futures)
- The date and month of delivery
- The units of price quotation (not the price itself) and minimum change in price (tick-size)
- The location of settlement.

In case of futures, the exchange house itself becomes the counter-party which guarantees every trade once a trade is confirmed by two members of the exchange. There are more liquid and transparent in price due to the standardization and market reporting of volumes and price.

Furthermore,reviews for trading futures only one way to win. A futures contract can be reversed with any member of the exchange. If futures contracts are priced above the spot price, it is known as the Contango market. If the futures price prevails below the spot price, it is known as Backwardation.

There are two types of option trading involved: The call option and the put option. Call option is the option to buy; usually it’s purchased in the expectation that the price will be increased in the market. However, the put option is the option to sell in the expectation that the price will be fall in the market, so the writer put the option to protect the profit of the investment.

Therefore, options are similar to futures. They allow investors to hedge against the risk of versatile market prices. Furthermore, since it cost nothing upfront to involved themselves in futures contract, however there is an immediate cost involved in option contract which also called "premium". It’s a great investment tool for the speculators to take it as a gamble for huge profits with limited liability.

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