Trading the Market Through Options
Unlock new trading strategies and capital efficiencies
Trading options is different than trading stocks, but it doesn't have to be daunting. Remember that having a balanced, diverse portfolio is one of the most important ways you can protect your investments. Using index options is simply another way of broadening your investing opportunities and can be used in nearly every investing situation.
U.S. Equity Indices
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Getting Started with Index Options
Whether you’re bullish or bearish on your investments, index options can be a great tool to provide portfolio diversification and generate income. Learn why index options should be a new tool in your trading arsenal.
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ETF Options vs. Index Options
Index options and ETF options are very similar. Cboe’s Mini index options offer very similar notional size, weekly expirations, and PM-settlement like the most popular corresponding ETF options. But there are a few key differences that traders need to keep in mind.
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Trading Market Volatility
Many investors consider equity market volatility to be a distinct asset class with unique properties. The Cboe Volatility Index®, or VIX Index®, was created in 1993 and has become the premier gauge of expected U.S. equity market volatility. While the VIX Index is not tradable, Cboe offers options and futures on the Index that market participants can use for risk management or to express their view on the future direction of equity market volatility.
Cboe Volatility Index (VIX Index)
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The VIX Index and Volatility Futures
The VIX Index has unique characteristics that are unlike traditional equity and fixed income indices, and may allow for new investing strategies and opportunities. Learn more about the Cboe Volatility Index and how market participants can use Mini-VIX futures for risk management or to express their view on the future direction of equity market volatility.
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Getting Started with Futures
Futures can offer opportunities in new markets with relatively low margin requirements and round-the-clock trading. But, there are some key differences between futures, options, and stocks that traders should consider.
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Cboe Insights
Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of "Characteristics and Risks of Standardized Options." Copies are available from your broker or from The Options Clearing Corporation at 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 or at www.theocc.com.
Futures trading is not suitable for all investors, and involves the risk of loss. The risk of loss in futures can be substantial and can exceed the amount of money deposited for a futures position. You should, therefore, carefully consider whether futures trading is suitable for you in light of your circumstances and financial resources. For additional information regarding futures trading risks, see the Risk Disclosure Statement set forth in the Risk Disclosure Statement set forth in Appendix A to CFTC Regulation 1.55(c) and the Risk Disclosure Statement for Security Futures Contracts.
Past performance is not indicative of future results. The information in this article is provided for general education and information purposes only. No statement(s) within this article should be construed as a recommendation to buy or sell a security or future or to provide investment advice. Supporting documentation for any claims, comparisons, statistics or other technical data in this article is available by contacting Cboe Global Markets at cboe.com/contact.