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FAQ Page 2 - Question 15

Q: What's your view on trading options using spread bets?

A: Options on spread bets, options on futures, options on stocks, they're often a tough nut to crack. Most people start off buying options whether puts or calls but it means that not only the direction has to be forecast but also the timing. And it's hard to get both right together.

The basics of options are not that hard to understand on the surface but this is a classic mistake made by many. The actual workings of options are very complex and some of the finest brains in the world work on the options desks of the big banks and brokerages. These people are often the ones that you and I are trading against.

Option theory is similar to an iceberg where the majority of matter lurks unseen. If you do want to start trading options then do your homework, read, study the internet, ask questions on the message boards and don't commit any serious capital till you feel that you've got a good hang of them.

I myself trade options and options on spread bets, but it is only a small part of my business. I'd love for them to play a major part, but as I see it the market-makers normally hold the strongest and superior hands in that arena......

LearnMoney has a detailed section on Traded Options - Click Here