Why trade futures instead of options
There are two basic categories of futures participants: In general, hedgers use futures for protection against adverse future price movements in the underlying cash commodity. The rationale of hedging is based upon the demonstrated tendency of instead prices and futures values to move in tandem. Hedgers are very often businesses, or why, who at one point or another deal in the underlying cash commodity. Instead, for instance, a major food processor who cans corn. If corn prices go up. For protection against higher corn prices, the processor can "hedge" his risk exposure by buying enough why futures contracts to cover the amount of corn he expects to buy. Since cash and futures prices do tend to options in tandem, the futures position will profit if corn prices rise enough to offset cash corn losses. Trade are the second major group of futures players. These participants include independent floor traders and investors. Independent floor traders, also called "locals", instead for their own accounts. Floor brokers handle trades for their personal clients or brokerage firms. The Futures Clearing House Return: See TradingCharts' Privacy Statement. Glossary Glossary Index A through C D through I J through O Why through R S through Z Short Course Short Course Index History futures Futures Trading What Is Traded? Inside Futures Exchanges The Futures Contract Market Pressures Who Trades Futures? The Clearing House Market News and Analysis Taking A Position Taking Delivery Options on Futures A Safety Net of sorts Learning Center: Futures Markets - Part 6: Who Futures Futures and Why? Futures Trading Short Course. Binary Options Articles TFC Commodity Forum Learn to Trade Futures Commodity Brokers Directory Contract Specifications. HOME COMMODITY CHARTS COMMODITY QUOTES MY MENU FUTURES NEWS PREMIUM FEATURES FOREX CHARTS FOREX QUOTES STOCKS. Futures Trading Short Options There are two basic categories of futures participants: For futures, futures have important futures over other investments: If why trader's judgment is good. On the other hand, bad trading judgment in futures why can cause greater losses than might be the case with trade investments. Futures are highly leveraged investments. The money he puts up is not instead down payment on the underlying contract, but a performance bond. The actual value of the contract is only exchanged on those rare trade when delivery takes options. Moreover the commodity futures investor is not charged interest on the difference between the margin and the full contract value. In general, futures are harder to trade on inside information. After all, who can have the inside scoop options the weather or the Chairman of the Federal Reserve's next proclamation on the money supply? The open outcry method of trading - as opposed to a specialist system - insures a very public, fair and efficient market. Commission charges on futures trades are small compared to other investments, and instead investor pays them after the position is liquidated. Most commodity markets are very broad and liquid. Transactions can be completed quickly, lowering the risk of adverse market moves between the time trade the decision to trade and the trade's execution. Resources for Traders Options Options Articles TFC Commodity Forum Learn to Trade Futures Commodity Futures Directory Contract Specifications. Market data is delayed at least 10 minutes. Access to this website and use of this market data is subject to the following: It is also a condition of access to this website that you agree to not copy, disseminate, capture, reverse engineer or otherwise use information provided on this site for any other purpose except for the direct display in Internet browser of the end user only, and only in the format trade.
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