by Cea.

Question posed by Question: How do i make money in Indian futures and options market ?

Top answer:

If you know better then please let us know below.

by T U R K A I R O

Question by William M: Do you think that commodity options trading could create a billionaire in his/her early to mid 20s?
I want to know your views and opinions here as to wether you think that commodity options trading could create a billionaire in his/her early to mid 20s?

Also, I heard that a certain Richard Dennis traded commodity options, and in 10 years he turned his $ 400 into $ 200 million. Think if you started with $ 2k, in theory you could have started at my age (18) with $ 2k and ended up with $ 1 billion at 28, right?

What do you think?

Top answer:

Answer by matthewspeed
If you KNEW what was going to happen there is no limit to the amount that could be made. A person could easily realize a return of 100% daily on each round trip options contract (one buy, one sell) if they could correctly pick the direction a stock with large option volume was going to move. The problem is being right 100% of the time.

Whether you agree or disagree, why not leave your own thoughts below.

by IFPRI-IMAGES

Question posed by Shaq: Can you earn a living by trading stock options, commodities or futures??? I am a freshie, where can i start??

My chosen answer:

Answer by FortyLoveTX
You CAN earn a living. You CAN also lose your shirt, your pants, your shoes, your house, your car etc.

Whether you agree or disagree, why not leave your own thoughts below.

by UIC Digital Collections

Question by Butch: Why would you trade commodities over options?
Other than someone who deals in physical product why would anyone risk trading in commodities? As I understand it buying options limits your downside risk and can have unlimited upside. It seems like the risk of unlimited negative moves would push most traders to options. Hedgers can use them too. What am i missing? I guess somebody has to trade the commodity for there to be a market.
Thanks in advance.

The best answer:

Answer by zman492
<<>>

To make money.

<<>>

Buying options limits your downside risk to 100% of your investment.
Buying a commodity limits your downside risk to to 100% of your investment (plus holding costs if any).
The maximum gain from buying options is unlimited.
The maximum gain from buying a commodity is unlimited.
The only way the buying options limits your risk compared to buying the commodity is the maximum amount you can lose per unit (such as bushel, pound or barrel) is lower. However, to have the ability to make the same total profit you have to invest in more units.

<<>>

Let’s look at some examples. Let’s assume five investors, each with $ 24,000, think the price of widgets will go up. Widgets cost $ 80 each. There are call options available on widgets. The $ 75 strike price call option costs $ 8 per widget and the $ 85 strike price call option costs $ 3 per widget.

Alice buys 300 widgets for $ 24,000.
Ben buys 300 $ 75 call options for $ 2,400 and leaves the rest in the bank earning interest.
Carol buys 300 $ 85 call options for $ 900 and leaves the rest in the bank earning interest.
Dave buys 3,000 $ 75 call options for $ 24,000.
Eve buys 8,000 $ 85 call options for $ 24,000.

Assume all five hold their investment until the option expiration date.

If the price of a widget on that date is $ 70 all the options would expire worthless.
Alice would have lost 300 x ($ 80 – $ 70) = $ 3,000
Ben would have lost $ 2,400
Carol would have lost $ 900
Dave would have lost $ 24,000
Eve would have lost $ 24,000

If the price of a widget on that date is $ 80 the $ 75 options would be worth $ 5 each and the $ 85 options would expire worthless.
Alice would have broken even.
Ben would have lost 300 x ($ 8 – $ 5) = $ 900
Carol would have lost $ 900
Dave would have lost 3,000 x ($ 8 – $ 5) = $ 9,000
Eve would have lost $ 24,000

If the price of a widget on that date is $ 90 the $ 75 options would be worth $ 15 per widget and the $ 85 options would be worth $ 5 per widget.
Alice would have made 300 x ($ 90 – $ 80) = $ 3,000
Ben would have made 300 x ($ 15 – $ = $ 2,100
Carol would have made 300 x ($ 5 – $ 3) = $ 600
Dave would have made 3,000 x ($ 15 – $ = $ 21,000
Eve would have made 8,000 x ($ 5 – $ 3) = $ 16,000

What this example demonstrates is that

(1) If the price of underlying makes a big enough move up the options will have a higher percentage gain, but if the price stays fairly steady or drops the options will have a loss percentage greater than that of the underlying.

(2) If the same number of dollars is invested options give leverage and will usually have much greater gains or losses than an investment in the underlying,

(3) If you use the same number of units and the price goes up, the underlying will always make more dollars than an investment in the options.

In other words

(1) An investment in call options is much riskier than an equal dollar investment in the underlying but has a potential for a higher return if the price of the underlying goes up enough.

(2) An investment in call options can neither lose or make as much as an investment in an equal number of units of the underlying.

How about adding your own answer to the comments below!

by UIC Digital Collections

A question asked by Xoxo: What’s easier to learn – Trading forex, futures, options, commodities or stocks?
Also, which is the least risky and which requires the least start up capital?

My chosen answer:

Answer by mark
Stocks is the easiest and requires the least upfront capital

If you know better then please let us know below.

by DFID – UK Department for International Development

A question from skahhh: Where can I find a good tutorial on commodity and on stock options trading?

The top answer:

Answer by swim_girl2003
www.investopedia.com

Whether you agree or disagree, why not leave your own thoughts below.

by 92YTribeca

Question by michaelpc12: Is there a safe way of investing in the futures market . A broker has told me that using put options as ?
insurance is safe . How would i do that or how would i judge that to be a safe if i did it that way.

Selected answer:

Answer by IceT
The futures and commodities markets are the riskiest.

Provide your own answer to this question below!

by UIC Digital Collections

Question posed by Phoebus: Anyone experienced in commodities options trading?
I have sold 3 – MARCH08 120 CALL at 7.36
Now I want to buy the sold CALL. But the Open Interest is 0 and the Market Price of Coffee is around 133. How do I buy this CALL or hedge it????

Best answer:

Answer by Oh Boy!
First, if you’re short 3 options then there can’t be zero open interest.

Second, according to Bloomberg the option interest for that option is 1473.

Finally, there doesn’t have to be open interest for you to trade the option. Otherwise how would there EVER be open interest? Your broker should be able to get the options bought back. Just give them an order.

You don’t seem to really understand option trading so why are you selling options? The best way to start would be to buy options or sell spreads.

Agree or disagree? Leave your own thoughts below.

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by RambergMediaImages

A question asked by Parker: Where is there more beginner trading potential. Stocks, Options or Commodities?
I have many hours to spend in teaching myself how to do day trading for Stocks, Options or Commodities.

Does anyone have any suggestions on which market would be have the least complex learning curve?

Top answer:

Answer by Ben
They all have their own particular complexities. One could argue that stocks are the most complex, but are the best place for a beginner to start since they’re the least risky of the three. That said… if you plan on daytrading, I’d probably daytrade the emini futures. They’re extremely liquid and you don’t have to wait hours just to make a gain of like 2% Just be sure to practice tons before you start. Many places offer free online paper trading so you

What do you think? Leave you answer below!