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Options are rapidly emerging as an alternative Forex
investment vehicle ;
Call: Purchasing a call
gives you a specific locked in price at which you have the right but
not the obligation to buy a contract that you expect to increase in
value. You would purchase a call option if you are looking for the
price of the commodity to rise.
Put Purchasing a put gives you a
specific locked in price at which you have the right but not the
obligation to sell a contract that you expect to decrease in value.
You would purchase a put options if you are looking for the price of
the commodity to decline.
Why Trade
Options? :
- Your
downside risk is limited to the option premium ,the amount you
paid to purchase the option.
- You have
unlimited profit potential.
- Options
can be used to hedge against open spot (cash) positions in order
to limit risk.
- Without
risking a lot of capital, you can use options to trade on
predictions of market movements
The risk in the purchase
of options is the amount of your investment plus associated fees.
The greater the price movement provided it's in the direction you
anticipated and provided it occurs during the life of the option,
the larger the profits. It is the combination of limited risk
and unlimited opportunity that is a principal attraction of options
as an investment
vehicle.
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