Saturday, November 19, 2011

Whats the difference between investing in the stock market and futures and options trading?

What is the difference between investing in the stock market and futures and options trading?|||Let's see:





Investing in the stock market means that you are buying an ownership interest in a corporation which provides valuable goods and services. If you invest broadly enough in stock markets, you are betting that global growth will happen during the holding period which accrues to the owners of global corporations.





Trading in futures means that you think that pork bellies are going to go either up or down faster than they would go in the other direction which would cause you to be closed out.





Trading in options means either you are an amateur looking for increased leverage on a directional bet in just about any market anywhere or you have some opinion about volatility which is different from the price of volatility expressed in the option.|||Stocks have ongoing ownership, and futures and options have a set life expectancy / additional leverage with an expiration date after which they become worthless

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