Option trading and spot forex trading, whats the major difference?

Laurel

Member
58 0
In your opinion what is the major difference?

Which one has more advantages, spot forex or option trading?
 

etem_tezcan

Junior member
42 2
when trading forex or futures, you expose yourself to unlimited loss and gain. When selling options, your gain is limited, loss unlimited but you have a nice cushion working with you. when buying options, your loss is limited, gain unlimited but that cushion is against you.
Options kinda forces you to trade in a longer term view since their bid/ask difference is greater than forex/futures. One can also use options to trade with a "reduced tick value" than outright futures.
 
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Rhody Trader

Senior member
2,620 264
Options and forex are radically different types of markets. They don't have a great deal in common because of the structural differences. The advantage to options is that you can be very creative and specific with the types of market plays you are looking to make. The disadvantage is that unlike forex where you're risk is strictly price related (potentially with carry tossed in), with options there are multiple ways to be at risk.
 

coolTrader

Established member
610 6
In your opinion what is the major difference?

Which one has more advantages, spot forex or option trading?
Options- You use a premium to buy a call or a put. Your loss is limited to the premium. Basically you start down and could make a unlimited profit.
- If you sell(write) a call Your loss is unlimited and you are limited to the premium you recieve. If you sell( write) a put your loss is bound by the price (0,premium)

Forex trading is a heavily geared market, your margin is constantly being marked to market. If there is a significant move against you and you do not have a stop loss you will be required to put up more margin.
 

Red Streak

Newbie
4 0
The advantage to options is that you can be very creative and specific with the types of market plays you are looking to make.
I trade stocks, just go straight long or short on different symbols. I only make money when I sell higher than I bought, and that's true whether I go long or short.

I'm wondering, why options are so much better to trade than stocks? So you can be more creative with options than with stocks, but in this game, I only care about profit - so does that added creativity afforded by trading options then carry over into added profit? If so, I'd love more details as to how that happens, exactly.

I remain somewhat unclear as to how, from the standpoint of maximizing profit, are options better than simply going long or short on various symbols.

I also once saw someone mention an option setup where he made money (and I'm assuming that means profit) whether the price went up or down. Is this possible, and if so, wouldn't that be basically the holy grail of trading?
 

etem_tezcan

Junior member
42 2
I trade stocks, just go straight long or short on different symbols. I only make money when I sell higher than I bought, and that's true whether I go long or short.

I'm wondering, why options are so much better to trade than stocks? So you can be more creative with options than with stocks, but in this game, I only care about profit - so does that added creativity afforded by trading options then carry over into added profit? If so, I'd love more details as to how that happens, exactly.

I remain somewhat unclear as to how, from the standpoint of maximizing profit, are options better than simply going long or short on various symbols.

I also once saw someone mention an option setup where he made money (and I'm assuming that means profit) whether the price went up or down. Is this possible, and if so, wouldn't that be basically the holy grail of trading?
yeah this is possible however it must go UP or DOWN. if it stays in a range you lose money
 

Martinghoul

Senior member
2,690 276
I trade stocks, just go straight long or short on different symbols. I only make money when I sell higher than I bought, and that's true whether I go long or short.

I'm wondering, why options are so much better to trade than stocks? So you can be more creative with options than with stocks, but in this game, I only care about profit - so does that added creativity afforded by trading options then carry over into added profit? If so, I'd love more details as to how that happens, exactly.

I remain somewhat unclear as to how, from the standpoint of maximizing profit, are options better than simply going long or short on various symbols.

I also once saw someone mention an option setup where he made money (and I'm assuming that means profit) whether the price went up or down. Is this possible, and if so, wouldn't that be basically the holy grail of trading?
Options aren't necesssarily better, they just offer you a different type of payout for a different type of risk (the differences are mainly the different leverage and the possibility of limited downside). With options, you can make money regardless of the direction of the underlying, but that doesn't come without risk, so this isn't the Holy Grail.
 

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