Trading Options and Futures
Trading for options can be available to traders as either puts or calls. This is dependent on whether they provide the right of buying or the right of selling. The call options provide the investor the right of buying the principal commodities. The put options provide the right of selling those principal commodities as well. These rights can be effective when the options are used. For the European options this may occur on the date of expiration. For the United States options this can happen within anytime except after the date of expiration.
The options markets just like the futures markets may also be traded in the two directions of the market. When traders deem that the direction of the market might go up, they may purchase a call. When traders deem that the market might fall down, they may purchase a put. Sometimes they can also use the options strategy of purchase the two options of a put and a call, and this implies that they are not concerned of the market's direction or how it moves.
Long and Short
With the markets of options and the market of the futures, the long and short always pertain to the purchasing and selling of a single contract or more. However the options market is not like the futures markets because it never refers to the trading directions. When a futures transaction is joined by purchasing a specific contract, this trade is called a long and by this the trader wishes the rate to increase. However in options, any trade can be joined by purchasing a contract called a Put and remains to be recognized as a long type of trade, although the trader doesn't want the price to decrease.
1. If the type of entry is through buying. The direction of the market is up and the type of trade is long. If the type of entry is through selling, the direction of the market is down and the type of trade is short.
1. If the type of entry is a call, the direction of the market is up and the type of trade is long. If the type of entry is a put, the direction of the market is down and the type of trade is a long.
The significant point is that with the trade of options which is joined or entered through purchasing either a put or a call is still recognized as a long type of trade irregardless of the direction the traders wish the rates to move. They would wish the direction to move up when entering with a call and down when entering with a put.