Swing Trading: Futures vs Options

Discussion in 'Index Futures' started by WmWaster, Apr 30, 2006.

  1. Swing Trading: Futures vs Options

    Hi.
    I'm thinking of holding my postions a bit longer (eg a few days to several weeks) to improve my trade, so I would like to involve in some swing or short-term position trading.

    Which instrument, future or option, is better for a swing trader? My criteria are based on risks, rewards & capital utilization.

    I trade Hong Kong Hang Seng Index. The market opens only in the morning (session 1) and early afternoon (session 2). There's always an opening gap each day.

    Future:
    - tight spread(eg 1-2pips)
    - require margin
    - unlimited risks but you can always control your risks by stop orders
    - more rewards since every pip you gain will get into your pocket

    Options:
    - wider spread(eg can be about 10 pips wide ocassionally)
    - require margin only if you sell call/put
    - max. risk is fixed for call/put buyer
    - you need to pay premium, so you can only gain after your gain can offset your premium

    Any advice?

    Note: Even if you know nothing about Hong Kong Hang Seng Index, you can still give advice based on your general knowledge about futures and options. Thank you!