Top Option and futures trading strategies for beginners

Options and futures are one of the most sophisticated and advanced trading sectors of the market. It further gets interesting due to their high earnings potential and massive margin available to them. However, it is crucial to understand the points such as rewards, risks, strategies to trade, and more to get started.

In this article, we’ll study the top options and futures trading strategies and techniques. Usually, a trader has two bets to make in both the options, i.e. to either go long or short. However, the methods to trade both the bets vary from person to person. Across all of them, the best ones are listed here.

Top Futures Trading Strategies

Bull Calendar Spread: A bull calendar spread is a loss proof strategy and works when the investors buy and sells the same underlying financial asset at the same time, but with different expiring dates. With this technique, the trader must go long in the short duration contract and go short in the long-duration contract. The primary objective is to widen the spread in terms of a long agreement.

The investor has several ways to earn money: the Long contract can rise, the short contract can fall. The long can go up, while the short can fall. The long rises more than the short rises. The long fall less than the shortfalls.

Bear Calendar Spread: Similar to the above strategy, a bear calendar spread technique also works when the investor buys and sell the same underlying financial asset at the same time, but with varied expiring dates. The strategy requires an investor to sell the short term contract and buy a long duration contract. The aim is to widen the spread in terms of the short contract.

Here also, the investor has several ways to earn, some of which are: The long contract falls, the short contract rises. The long falls more than the shortfalls, and the long rise less than the shortfalls.

Best Options Trading Strategies

The Long Call: A long call is a popular options trading strategy where the investor expects the stock to rise above the strike price and profit from the gains. It also caps the loss to the premium only as the long call buyer also can neutralise the contract, if he wants to in cases like share price slump.

Best Time: The best time to use a long call is when a particular share or commodity has high growth potential, and the investor expects the prices to rise in the coming time. The high growth potential would also apply to the downtrend, but the investor’s loss is limited to premium only.

Example: Suppose a company stock A is trading at $500 currently and can rise in the future. You buy a call option for stock A at $25 premium, i.e. 5%, per share and buy 100 shares. Now, here are the calculations.

Total Stock Bought: 100

Price of Stocks: 100 x 500 = $50000

Total Premium: 25 x 100 = $2500

Maximum profit = Unlimited

Maximum Loss = $2500 (Premium Amount)

The Long Put: As same as a long call, the long put is when the investor expects the financial asset’s price to fall. Instead of directly shorting the share, the long put, in exchange for some premium, limits the loss and uncaps the profits. If the stock falls, as predicted, the trader would profit, and if it rises, then the investor still can neutralise the contract.

Best Time: The best time to use a long put option is when a particular share or commodity has the potential to fall, and the investor expects the prices to slump drastically in the coming times. The high growth potential would also apply to uptrend, but the investor’s loss is limited to premium only.

Example: Suppose a company stock A is trading at $500 currently and has the potential to fall significantly in the future due to becoming overvalued. You buy a put option for stock A at $25 premium, i.e. 5%, per share and buy 100 shares. Now, here are the calculations.

Total Stock Bought: 100

Price of Stocks: 100 x 500 = $50000

Total Premium: 25 x 100 = $2500

Maximum profit = Unlimited

Maximum Loss = $2500 (Premium Amount)

Top Futures & Options Trading Brokers

ROInvesting: 101Investing is the trademark name of FXBFI Broker Financial Invest Ltd. (a registered Cyprus based firm) and is regulated by the top financial body, CySEC (Cyprus Securities and Exchange Commission) under license number 315/16. The firm offers more than 350+ trading instruments for investment, all accessible through the robust trading platform Meta Trader 4. The trading platform is accessible through mobile, web, and desktop versions and the available market types are shares, crypto, currencies, indices, metals, ETFs, and commodities. Note that all these are accessible through the CFD instrument.

Apart from it, there are many payment methods for deposit & withdrawals, including Skrill, Neteller, bank portals, and cards. You can try the broker’s free demo account to test their services.

Global TradeATF: Global TradeATF is the trading name of Bayline Global TWorld Ltd. and is also the official partner of the popular soccer club, Argentine National Team. The firm is registered in the Belize holding the registration number SC517838 and is also licensed under IFSC bearing the regulation number 000188/91. The venture offers excellent trading services & products at low cost. The other top features of Trade ATF broker are excellent customer support, user friendly and useful MetaTrader4 platform, a wide range of products (350+), impressive education library, and high tech advancements.

Note that the firm offers a free demo service account to all its users to test the broker features and practise their trades in advance without losing a buck.

HFTrading: HFTrading is a New Zealand headquartered brokerage firm that offers trading services & products at low cost, and is a trading name of the investment firm CTRL Investments Limited. The firm is registered at the New Zealand & Australia through the registration numbers 2446590 and ARBN 152 535 085. Furthermore, the trading site offers 350+ trading instruments from the market types, shares, crypto, commodities, indices, and forex pairs. Apart from it, the site facilitates the trades through the widely used MT4 platform, accessible through mobile, desktop, and website versions.

Some of the other top features of HFTrading are constant customer service, several deposit & withdrawal methods, high leverage, and free demo account.