When some think about CFD trading, they automatically think of the futures market. In reality, however, CFD options’ trading is quite a viable alternative. This may appeal to some who are less eager to take risks. They may wish to have more set factors than variables.
With CFD options, you can select the position you wish to have in the trade, and you can also trade out before the expiry date.
Beforehand you decide if you wish to trade from the call or the put position. The call option is one where you feel the value of the stock will go above the agreed price.
The difference between the two would be what you either earn or lose. If you choose the put position, you anticipate that the stock value will fall below the agreed price. Thus, you either earn the difference between the agreed price and the stock value or lose if the stock value is above the agreed price.
With CFD options, you still benefit from paying a fraction rather than full price for stock up front, nor are you stuck with owning a stock that has depreciated. There is no transfer of ownership, simply speculation on value. CFD options trading is not offered by all investment firms, however.
Only larger firms that have diversified their product tend to provide this option. In fact, as previously mentioned, options trading and CFD trading are usually considered completely separate. Companies like IG Markets have seen the potential and decided to enter this trade. Possibly, it will become more popular in the future.
It is important to note that CFD options’ trading is legal. However, whenever beginning any trade, no matter how simple it seems, it is best to consult a broker that specializes in that area. All types of trading and investments come with risk so while CFD options’ trading is considered safer than traditional CFD trading, never take this for granted.
In fact, it is best to go with the companies that handle such trading with confidence. This is and of itself can be considered a risk management move.