Is options Trading better than Futures Trading? As in options the risk is predefined.?

Answer 1

It depends on the volatility of the underlying asset prices. Futures are played with physical assets most of the time with hedges created with Futures. Options can be played Naked without physical underlying assets in hand. Index options are less riskier than individual options since they fluctuate with the market. Individual options with high betas fluctuate higher than index options. For futures it is the same. Individual options and futures wit beta less than 1 is less riskier. But then probably less trading take place in such instruments for lack of volatility to make it interesting worth trading for profits.

Answer 2

Both are darned risky. Options have predefined risks...but the worst case is you lose everything. That's not going to happen to you very often in a stock or mutual fund (at least in the short run...which if we're talking options and futures, that is the appropriate time period). In a futures trade, you can lose more than everything. If you have a contract with a $1,000 margin and it moves $2,000 against you, you still have to come up with the other $1,000...your losses aren't limited to margins.

Risk can be adjusted for by position size. More risky asset...smaller position. Less risky asset, larger position.

The #1 reason new traders fail is they use too large of position sizes. Sooner or later, a bad trade or bad streak hits, and wipes them out. I usually size positions by figuring what I think the worst case is, and then deciding how much I'm willing to lose on a trade. Keeps me out of trouble.

Answer 3

The risks are predefined for both options and futures. For a given percentage move in the underlying asset, you are always able to calculate beforehand with either futures or options what your losses or gains will be.

With options you probably will need a computer to help with the calculations while with futures you can probably do with pencil and paper.

Answer 4

Days is partly right. You can determine risk in futures, but that is based on being able to get out at your stop loss point. For example, let's say you are long crude futures at $62.50 and you have a stop loss at $61.25, so your loss risk is $1250 ($1.25 x 1000 barrels), but that assuming the stop loss it triggered. What happens if the market gaps below your stop loss and it's not triggered, or the market moves so quickly that the fill on your stop loss is below your order? Your losses can quite a bit more.

Options have prefined losses limits ONLY on long options (long puts and long calls), but are unlimited on short options (short puts and short calls).

Is it better? In some ways Yes, in some ways No. It's too extensive a subject to get into here, but I would strongly suggest you study up on futures and options to see the pros/cons of each.

Answer 5

You can't succed in binary trading without a strategy, a good method to follow and some kind of software support. They program I use is called "Autobinary signals". It helps finding loopholes for guaranteed returns. It's very easy to use and I'm earning good money. You find all the details on this site: http://tradingsignal.toptips.org

Answer 6

I don't know which one is better..but as I know...we can combine both of them to minimize a risk...option can act as an insurance if u've got loss in futures trading...

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