Tobbaco

[jassielarry]

what is future trading in stock market? and what's the difference between future and options trading in stock market?

Thanks in advance

[Wonka]

The primary difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.

From http://www.investopedia.com/terms/f/futures.asp

[fletchsmile]

If interested in futures and options on the Thai TFEX exchange, that is a lot of good info and knowledge resources to start with here:

http://www.tfex.co.th/en/education/knowledge.html

and

http://www.tfex.co.th/en/products/products.html

Cheers

Fletch

Edited May 27, 2014 by fletchsmile

[IMA_FARANG]

The primary difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.

From http://www.investopedia.com/terms/f/futures.asp

--------------------

Good info, so I quoted it.

If you asked me I also would have added that:

• That futures trading is a very high risk form of investment
• That while you may het it right and make s lot of money, you can also get it wrong and lose a lot of money
• That therefore only do futures if you can afford to lose on what is essentially a calculated guess.
• That therefore you need to know and be aware of what you are doing
• That on level ground, with a fair system with care you may be able to make money with futures trades.
• But also that , in my opinion, the SET (Stock Exchange of Thailand) is NOT a fair system and is manipulated by a small l wealthy clique for their own profit

And therefore any trading on the SET is not a good idea, and especially futures trades based on the SET.

As the Thai bargirls will say, "O.K, Up to you".

[Jomtien]

Futures trading is a profession, you have to go for it for 100% or fail. Big banks & prop shops fully control and manilulate it (read the book flash boys).

Bigmiketrading dot com is (i think) the best source to get info. And if you'r interested in trading them, check google on terms like TPO (time price opportunity), MP (market profile), VP (volume profile)

Wish u luck !

Jomtien

Edited May 28, 2014 by Jomtien

[SheungWan]

The primary difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.

From http://www.investopedia.com/terms/f/futures.asp

-----------------

• But also that , in my opinion, the SET (Stock Exchange of Thailand) is NOT a fair system and is manipulated by a small l wealthy clique for their own profit

I usually hear that either from those who do not trade or those who do and are confounded by price movements that do not meet their expectations.

[SheungWan]

Futures trading is a profession, you have to go for it for 100% or fail. Big banks & prop shops fully control and manilulate it (read the book flash boys).

Bigmiketrading dot com is (i think) the best source to get info. And if you'r interested in trading them, check google on terms like TPO (time price opportunity), MP (market profile), VP (volume profile)

Wish u luck !

Jomtien

Banks, hedge funds and the rest get their fingers burned as does anybody else. Ever heard of a short squeeze? No such thing as 'fully control' except in the minds of conspiracy theorists.

[SheungWan]

The primary difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.

From http://www.investopedia.com/terms/f/futures.asp

Well yes, except that the link also points out that futures might be settled in cash rather than physical delivery and that the holder of a futures position can also offset the futures contract by effectively shorting it. The key difference between the 2 types of contract is that the buyer of an option is limited in losses to the price of the premium as it is only an option to buy. (Not so the seller of calls and puts however).

[ATF]

Before you think about futures and options do you know what a SMA, EMA, RSI, MACD is? If you don't know find out about them first. If you do, consider CFD's. They are less risky than futures and options, give huge leverage and hardly affect your margin. Debit options are limited loss instruments but the price in relation to the underlying stock can fluctuate wildly. Credit options can put you on the end of a shovel.

[TimCM]

If you have to ask what they are, for the love of whatever god you like, don't even think about trading in them.

Even with massive research teams and complicated trading algorithms, we still sometimes lose big. If you want to gamble, go to the casino where you can understand how much exposure you have.

This is not investing, it is trading. That means to make money, you need to outperform the other side of the trade. Chances are this will be a full time trader or even an investment bank. That does not even account for high speed traders.

[fletchsmile]

Before you think about futures and options do you know what a SMA, EMA, RSI, MACD is? If you don't know find out about them first. If you do, consider CFD's. They are less risky than futures and options, give huge leverage and hardly affect your margin. Debit options are limited loss instruments but the price in relation to the underlying stock can fluctuate wildly. Credit options can put you on the end of a shovel.

Not sure where you get the idea from that CFDs are less risky than exchange traded futures and options. It depends on the product traded.

A like for like instrument/ contract would be less risk on a recognised exchange compared to an over the counter derivative or CFD. If you took an equity option on a share on a recognised UK exchange it would be lower risk than a similar option thru your CFD broker, similarly for forward contracts/ futures

The credit risk for one is much lower on a recognised exchange, transparency is much higher, as is liquidity. Depending on the CFDs your broker could also be the other side of the contract which is not healthy at all... Read up the tricks CFD providers and brokers can play on clients as a result.

Cheers

Fletch

[fletchsmile]

If you have to ask what they are, for the love of whatever god you like, don't even think about trading in them.

Even with massive research teams and complicated trading algorithms, we still sometimes lose big. If you want to gamble, go to the casino where you can understand how much exposure you have.

This is not investing, it is trading. That means to make money, you need to outperform the other side of the trade. Chances are this will be a full time trader or even an investment bank. That does not even account for high speed traders.

I'd agree with TimC's first sentence, that if someone has to ask they are not ready to transact in them. Then again we all have to start somewhere, and build knowledge from somewhere.

Casino's don't make sense to me as a trade or investment - the odds are stacked against you and in favour of the house. Casinos are not much more than fun or distraction for 99%+ people.

To OP

It's not necessarily true to say that to make money you need to outperform the other side. It depends how one uses the products and in conjunction with what other products. Perfectly possible to use them for hedging purposes to reduce your risk profiles, smooth returns or enhance yields. A person on the other side of the trade may want to hedge in the opposite direction and reduce or increase their risk in the opposite direction.

For example someone long equities or mutual funds like myself could sell call options to potentially enhance income yield or buy put options to protect from adverse downward movements in price or a combination of both, buy puts financed by selling calls and being long the underlying. This helps transform and smooth returns,

eg would somebody prefer 10% return with an SD of 20% (variance+/- 20%) or return of 9% with an SD of 5% (variance +/-5%)? I'd take the latter even though the return is a bit lower the risk is much lower.

Even just trading options by combining different SET50 options someone can set up risk / reward profiles to their liking/ needs.

It's not all about one way bets and directional trading one person wins another loses. I quite happily bear a cost or loss one one contract if it reduces my overall portfolio risk, or allows me to fund another position which has more upside. It's common for traders also to "lock-in" gains by taking out contracts in the opposite direction.

So to look at the future or option in isolation is often a narrow focus. You may need to look at a whole portfolio.

Key is risk adjusted returns. Not hard to see how it can then end up win-win if you define win more broadly

BTW: I'm not saying everyone does this, and there are a large number of people simply directional trading, but there are also a large number of people hedging, strategic trading etc

As TimC says though if you go in with a simple mindset of win/lose on individual transactions and thinking you can outperform the other side, chances are very high you will lose with no experience. In addition to understanding the products you need to understand what you want to achieve and how you are going to use them. (Simply saying trade them to make money won't get you far)

Cheers

Fletch

Edited May 29, 2014 by fletchsmile

[ATF]

Before you think about futures and options do you know what a SMA, EMA, RSI, MACD is? If you don't know find out about them first. If you do, consider CFD's. They are less risky than futures and options, give huge leverage and hardly affect your margin. Debit options are limited loss instruments but the price in relation to the underlying stock can fluctuate wildly. Credit options can put you on the end of a shovel.

Not sure where you get the idea from that CFDs are less risky than exchange traded futures and options. It depends on the product traded.

A like for like instrument/ contract would be less risk on a recognised exchange compared to an over the counter derivative or CFD. If you took an equity option on a share on a recognised UK exchange it would be lower risk than a similar option thru your CFD broker, similarly for forward contracts/ futures

The credit risk for one is much lower on a recognised exchange, transparency is much higher, as is liquidity. Depending on the CFDs your broker could also be the other side of the contract which is not healthy at all... Read up the tricks CFD providers and brokers can play on clients as a result.

Cheers

Fletch

When you buy a CFD you are essentially buying the underlying stock. CFD's are usually only available for larger cap stocks in liquid markets. I like trading them because I can buy millions of dollars of a stock at a time with a much smaller influence on my margin. The margin impact is only around 10-15%. Whereas a futures or option contract will impact margin by it's full value. I have only ever had one problem and that was when my broker pulled a large short position in a CFD I was holding, which they are entitled to do anyway. CFD's have no time limit, this is a very important point to consider.

CFD's make more sense to me because I can buy $1M of stock at a cost of only max $150K margin. If the stock goes down it is easier to maintain a position because I can sell other holdings to protect the position. Options can quickly turn to zero or even go down or flatline when the price of the stock is rising. The main benefit of options in my opinion is use them in flat or volatile markets when a stock is completely unpredictable. So you can buy a spread, straddle, strangle etc. Again transparency depends on who you use. When I buy or sell CFD's I always get very close to my limit order no different from a stock. All the CFD's I buy are UK regulated.

I don't mean to rebutt you in any way and appreciate your input and if you can suggest a better and or safer trading strategy I am all ears.

[fletchsmile]

Before you think about futures and options do you know what a SMA, EMA, RSI, MACD is? If you don't know find out about them first. If you do, consider CFD's. They are less risky than futures and options, give huge leverage and hardly affect your margin. Debit options are limited loss instruments but the price in relation to the underlying stock can fluctuate wildly. Credit options can put you on the end of a shovel.

Not sure where you get the idea from that CFDs are less risky than exchange traded futures and options. It depends on the product traded.

A like for like instrument/ contract would be less risk on a recognised exchange compared to an over the counter derivative or CFD. If you took an equity option on a share on a recognised UK exchange it would be lower risk than a similar option thru your CFD broker, similarly for forward contracts/ futures

The credit risk for one is much lower on a recognised exchange, transparency is much higher, as is liquidity. Depending on the CFDs your broker could also be the other side of the contract which is not healthy at all... Read up the tricks CFD providers and brokers can play on clients as a result.

Cheers

Fletch

When you buy a CFD you are essentially buying the underlying stock. CFD's are usually only available for larger cap stocks in liquid markets. I like trading them because I can buy millions of dollars of a stock at a time with a much smaller influence on my margin. The margin impact is only around 10-15%. Whereas a futures or option contract will impact margin by it's full value. I have only ever had one problem and that was when my broker pulled a large short position in a CFD I was holding, which they are entitled to do anyway. CFD's have no time limit, this is a very important point to consider.

CFD's make more sense to me because I can buy $1M of stock at a cost of only max $150K margin. If the stock goes down it is easier to maintain a position because I can sell other holdings to protect the position. Options can quickly turn to zero or even go down or flatline when the price of the stock is rising. The main benefit of options in my opinion is use them in flat or volatile markets when a stock is completely unpredictable. So you can buy a spread, straddle, strangle etc. Again transparency depends on who you use. When I buy or sell CFD's I always get very close to my limit order no different from a stock. All the CFD's I buy are UK regulated.

I don't mean to rebutt you in any way and appreciate your input and if you can suggest a better and or safer trading strategy I am all ears.

I agree with you on some of the benefits you ve listed.

These arent lower risk benefits though but flexibility benefits.

Eg higher leverage might be more flexible but is higher risk than lower leverage if thingsmove against you.

Buying 1mio of stock at 150k marginis more comparable to a future than an option. A future will also not go to zero.

I d agree with you CFD have some benefits over exchange traded derivatives. Lower risk isnt really one of them tho. Flexibility, possibly higher leverage benefits yes.

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

[ATF]

Before you think about futures and options do you know what a SMA, EMA, RSI, MACD is? If you don't know find out about them first. If you do, consider CFD's. They are less risky than futures and options, give huge leverage and hardly affect your margin. Debit options are limited loss instruments but the price in relation to the underlying stock can fluctuate wildly. Credit options can put you on the end of a shovel.

Not sure where you get the idea from that CFDs are less risky than exchange traded futures and options. It depends on the product traded.

A like for like instrument/ contract would be less risk on a recognised exchange compared to an over the counter derivative or CFD. If you took an equity option on a share on a recognised UK exchange it would be lower risk than a similar option thru your CFD broker, similarly for forward contracts/ futures

The credit risk for one is much lower on a recognised exchange, transparency is much higher, as is liquidity. Depending on the CFDs your broker could also be the other side of the contract which is not healthy at all... Read up the tricks CFD providers and brokers can play on clients as a result.

Cheers

Fletch

When you buy a CFD you are essentially buying the underlying stock. CFD's are usually only available for larger cap stocks in liquid markets. I like trading them because I can buy millions of dollars of a stock at a time with a much smaller influence on my margin. The margin impact is only around 10-15%. Whereas a futures or option contract will impact margin by it's full value. I have only ever had one problem and that was when my broker pulled a large short position in a CFD I was holding, which they are entitled to do anyway. CFD's have no time limit, this is a very important point to consider.

CFD's make more sense to me because I can buy $1M of stock at a cost of only max $150K margin. If the stock goes down it is easier to maintain a position because I can sell other holdings to protect the position. Options can quickly turn to zero or even go down or flatline when the price of the stock is rising. The main benefit of options in my opinion is use them in flat or volatile markets when a stock is completely unpredictable. So you can buy a spread, straddle, strangle etc. Again transparency depends on who you use. When I buy or sell CFD's I always get very close to my limit order no different from a stock. All the CFD's I buy are UK regulated.

I don't mean to rebutt you in any way and appreciate your input and if you can suggest a better and or safer trading strategy I am all ears.

I agree with you on some of the benefits you ve listed.

These arent lower risk benefits though but flexibility benefits.

Eg higher leverage might be more flexible but is higher risk than lower leverage if thingsmove against you.

Buying 1mio of stock at 150k marginis more comparable to a future than an option. A future will also not go to zero.

I d agree with you CFD have some benefits over exchange traded derivatives. Lower risk isnt really one of them tho. Flexibility, possibly higher leverage benefits yes.

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

Fletch at the end of the day the Stock Market is risk but I don't understand why you believe a CFD has more risk than the underlying stock?

I know there have been some shady companies promoting CFD's along with other financial instruments but I understand them to be exactly the same as the stock however dividend and voting rights are not the same.

What CFD's have enabled me to do in the past is to massively cost average down to reduce a loss significantly in a losing position. I was taught if you don't know how to get out don't get in.

[fletchsmile]

ATF

I think you misread my post.

I said that CFDs are higher risk than exchange traded futures and options. This was following your comment you believe CFDs are lower risk tgan futures and options.

Essentially both are derivative products. The exchange traded derivatives will generally be lower risk on a similar instrument due to more liquidy, significantly reduced credit countetparty risk and increased transparency compared to risk of conflict of interests.

I didnt comment on comparing the underlyings to a derivative product as thats more a case of apples and oranges.

Simply exchange traded derivatives like futures and options vs OTC derivatives like CFDs

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

Edited May 30, 2014 by fletchsmile

[ATF]

ATF

I think you misread my post.

I said that CFDs are higher risk than exchange traded futures and options. This was following your comment you believe CFDs are lower risk tgan futures and options.

Essentially both are derivative products. The exchange traded derivatives will generally be lower risk on a similar instrument due to more liquidy, significantly reduced credit countetparty risk and increased transparency compared to risk of conflict of interests.

I didnt comment on comparing the underlyings to a derivative product as thats more a case of apples and oranges.

Simply exchange traded derivatives like futures and options vs OTC derivatives like CFDs

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

Got you. You take care man. If you've got anything hot PM me. Good Luck.