Wednesday, 21 November 2012

HEDGING FUTURE WITH OPTION

Hedging in common words is insuring against a negative event. This doesn't prevent a negative event from happening, but if it does happen and you're properly hedged, the impact of the event is reduced.
 HEDING FUTURE WITH OPTION
 1.Note the size of your futures position and buy a corresponding number of options.....
2. When you purchase an option, you must specify a strike price. An option with a strike price that's further away from the futures price costs less, but provides less protection against an adverse price move.
3.Buy a put option to hedge if you are long the futures contract.
4.Buy a call option to hedge if you are short the futures contract.
More about Option Call Put tips on google+ 

2 comments:

  1. Thanks for posting this nice and descriptive post. Keep on posting these kinds of informative posts in future also .


    By
    John Methew
    Options Trading

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  2. Thanking you for providing trading tips with technical analysis. I always found somting new on your blog. Excellent
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