The Basics of Options and Futures

The Basics of Options and Futures

Traders who would like to lessen the risks that they are taking usually diversify their investments. Instead of putting it all into stocks or bonds, they consider options and futures. They are able to speculate on the prices of various goods and securities which may provide them with profit even without actually acquiring ownership. Those who buy futures contracts only agree to buy a specified volume of the commodity at an agreed price and at an agreed date in the future. They do not have to deliver the goods physically but they can trade it with others in order for them to earn profit from the original price that they have paid for.

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