How Do You Trade And Understand Gold Options?
Profits in gold options trading are based on speculating on the rise and fall of underlying gold prices. A gold option is a commodity option contract or agreement that gives the buyer the right (option) to purchase a pre-determined quantity of gold at a specific price on a specific date (settlement date). Gold options appeal to new traders because they provide entry into the trade of gold at a fraction of the underlying gold price. The maximum risk is the price of the options premium (option contract price). Make an initial deposit (initial margin) by opening an options trading account. Gold option contracts are traded on commodity exchanges such as the Chicago Board Options Exchange and OptionsXpress.com. Working with established options exchanges minimizes the risk of non-delivery on the terms of the gold option contract. The amount of the initial margin requirement (amount to open account) will correlate with market volatility. Maintain an account balance above the initial margin to
