How To Trade Futures

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How Someone Can Make A Living Trading Options

Many people wish to make a living without investing too much. Though the stock market allows you a good opportunity to make quick money, but you need to invest a huge sum to make money in the highly uncertain stock market. As such, it is handy to have a trading opportunity that allows you to make quick bucks by investing as low as 500 dollars. This is where option trading comes into play to help you earn big bucks without investing a fortune. You can definitely make a living trading options, if you get familiar with the basics and adopt a sure fire strategy.

Basics of option trading

Put simply, an option is a contract which gives you a right but not the obligation to buy or sell a particular commodity or asset on or before the expiry of the contract (usually a month). A contract which gives you the right (not obligation) to buy a particular asset is called as a call option. On the other hand, an option contract which entitles you the right (not obligation) to sell a particular asset is termed as a put option.

How to trade options

Let us say that you want to trade currency (dollar) options. When you think that the price of the dollar will shoot up in the coming weeks, you must buy call option to profit from the trade. If the price of the dollar moves upward, you will profit from the trade; else you incur loss.

For example, let us suppose that the option value of the dollar is 0.50 for the strike price of 62 Indian rupees. If you think that the value of dollar will rise against the Indian rupee in the next few weeks, you can buy 1000 call option of the dollar by investing mere 0.50*1000=500 dollars. If the value of the dollar increases, the option value may shoot up to 0.60. In this case, you will make a profit of 100 dollars {1000*0.10(0.60-0.50)}. However, you will incur equal amount of loss in case the value of the dollar moves in the opposite direction.

Final words

Thus, it is certainly possible to make a living trading options. Get familiar with the basic terminologies of trading options. Analyze the market and assets in the light of market parameters, and start demo trading. Once you gain proficiency with demo trading, invest a small amount of money and trade effectively. Over a period of time, you could be able to make decent income by trading options.

http://expertoptiontrading.com/amember/go.php?r=468&i=l1
Click The Above Link To Learn How To Make A Living With Options