![]() Using options alone, or in combination with futures, a wide range of strategies can be implemented to cater to specific risk profile, investment time horizon, cost consideration and outlook on underlying volatility. ![]() Limit Potential LossesĪs feeder cattle options only grant the right but not the obligation to assume the underlying feeder cattle futures position, potential losses are limited to only the premium paid to purchase the option. Additional LeverageCompared to taking a position on the underlying feeder cattle futures outright, the buyer of a feeder cattle option gains additional leverage since the premium payable is typically lower than the margin requirement needed to open a position in the underlying feeder cattle futures. However, they are also wasting assets that has the potential to expire worthless. Feeder Cattle FuturesCompared to the outright purchase of the underlying feeder cattle futures, feeder cattle options offer advantages such as additional leverage as well as the ability to limit potential losses. More complex option trading strategies, also known as spreads, can also be constructed by simultaneously buying and selling options. Option selling is a popular strategy used by many professional option traders. Traders who believe that feeder cattle prices will fall can buy feeder cattle put options instead.īuying calls or puts is not the only way to trade options. Feeder Cattle call options are purchased by traders who are bullish about feeder cattle prices. Options are divided into two classes - calls and puts. 0.00% Commissions Option Trading! Trade options FREE For 60 Days when you Open a New OptionsHouse Account Call and Put Options
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