When someone looks into the possibility of future options trading instead of trading outright futures, they must understand that while you can develop an effective strategy, it is not a walk in the park. Future options trading can be much more complex than normal futures trading because there are numerous factors that go into entering an options position. These factors can include:
• What type of risk are you willing to accept? Do you want to limit your risk and decrease your probability of success or do you want to expose yourself to unlimited risk and increase your probability of success?
• Do you want to enter into a call option or put option?
• Do you know how you want bid-ask prices to look when you enter and exit a position?
• If you plan on entering a spread, do you know how to design that spread?
If you are looking at these questions regarding future options trading, don’t get overwhelmed if you do not know some, or all, of the answers. One of the keys of having a successful options strategy is having a dependable futures and options broker. Your broker should have all the resources to enter you into the type of position you want, along with designing certain positions and even providing trade recommendations.
Along with providing you the future options trading resources for entering and exiting positions, the software your broker provides is essential. Your broker should have live charting and quote systems that stream from the different exchanges, along with multiple platforms for your research and order entry.
Of course, especially in future options trading, there is always the question of the cost to you. But, you must remember the old adage: “you get what you pay for”. Some brokers will offer dirt-cheap commissions, but you will have no customer service should a problem occur, and their software may not be dependable. Other brokerages will offer low commissions but an expensive monthly fee for platform usage.
You MUST call the brokerages you are interested in and talk to the brokers about their services, commissions, software, reliability, etc.