What Is Options CFD Trading ?

Put simply, in the traditional trading market (not the CFD market) an Option is a contract where the seller gives the right, but not the obligation, to the buyer to buy or sell an underlying instrument such as a stock, commodity, index, forex pair or another asset. This comes with a predetermined price (the strike price) that the underlying instrument needs to reach before an expiry date. In the CFD market, rather than actually owning any options, the buyer/seller has the opportunity to speculate on the price difference of the opening and closing of the Option. When the Option CFD expires, the position is closed at the last available rate.

How do Options CFDs Work?

To understand Options CFDs, we must explore the basic fundamentals. Options CFD features follow traditional Option’s features in how the components are built. These include the following: The Underlying Instrument: This is the name of the instrument on which the option is based. Options CFDs are based on this and the components are derived from here. Call and Put: In a very broad sense, the two main types of Options are Calls and Puts. In the CFD market, the buyer of a Call Option speculates that the price will rise. The buyer of a Put Option speculates the price will fall. The Option CFD holder does not have the right to buy or sell, but will either profit or incur a loss from the difference in the opening and closing price.

The Strike Price: The strike price is the price of the underlying instrument on which the contract is set. E.g “Apple | Call 300 | Jul” is a contract based on the price of Apple being above, or below, $300 when it expires in July. In this case, the Strike Price is $300. A buyer of this contract expects the price of Apple shares to be above $300 when it expires.
Expiry Date: Every Option contract comes with an expiry date. If the rate of the underlying instrument does not reach the Strike Price before this date, the Option will expire with little, or no value. Also, the longer time duration an Option has, the more chance the market will move in the holder’s favour: in other words, the closer the contract gets to the expiration date, the less the time value of the option. Options CFDs are affected by time value in the same way as the underlying instrument.

ETFs

ETF stands for Exchange-Traded Fund. It's a type of investment fund and exchange-traded product, with shares that are tradeable on a stock exchange. ETFs are similar to mutual funds, but trade like a stock on an exchange. They generally provide exposure to a specific basket of assets such as stocks, bonds, commodities, or a combination thereof. The goal of ETFs is to track the performance of a specific index, sector, or commodity.

Why trade ETFs?

ETF CFDs offer several advantages that have increased their popularity among day traders:

• * Spread out your potential risks or rewards – you can trade an entire market as though it were a single stock or commodity.
• * Find additional trading opportunities – ETFs are designed to give you exposure to diverse markets/sectors within capital markets. This means you can diversify your portfolio without the need for a large amount of capital.
• * Enjoy tight spreads with zero commission for making a deposit and opening/closing a trade.

How does leverage work in ETF CFDs?

An exchange-traded fund (ETF) is a financial instrument that tracks (and sometimes amplifies) the market price of the top companies within a specific financial sector, such as aerospace, banking, energy, technology, or commodity, such as oil, natural gas, gold or lithium.
Trading ETFs with leverage allows you to multiply the size of a trade through the use of borrowed capital. As such, you can increase the potential profit or loss to be realised from the trade.

Investment Management

Long-term financial independence and stability are essential to your quality of life now and into the future. The future is always uncertain, but investment management offers a way to help safeguard your financial health using comprehensive strategies tailored to address your needs that also help manage risks.

Understanding Investment Management

Managing your portfolio involves more than trading stocks. A comprehensive financial strategy is the best approach for creating long-term financial health. 

Working With ECB Investment Services

We are committed to helping our clients achieve their financial goals. When you work with us, we take the time to understand your plans and desires and your risk tolerance level before helping you create a portfolio that addresses your needs. We also monitor your investments, making necessary adjustments when market conditions or your needs change.