Hello,
Let's say I have a choice b'ween "in the money" option contract and "futures" contract. I would like to know whether there is any benefit in choosing a futures contract over the options contract?
Advantages of options
Buying an options contract can help to lock-in the risk and we may not have to worry about extra-ordinary moves against our direction.
Disadvantages of options
1. Time decay: I can think of the issue of time decay --> but does it really exist if it is in the money?
2. Higher STT risk: Assuming that I forget to square off on expiry. O'wise I think liquidity may not be an issue and thus this may not be a big risk.
Am i missing something elementary?
Let's say I have a choice b'ween "in the money" option contract and "futures" contract. I would like to know whether there is any benefit in choosing a futures contract over the options contract?
Advantages of options
Buying an options contract can help to lock-in the risk and we may not have to worry about extra-ordinary moves against our direction.
Disadvantages of options
1. Time decay: I can think of the issue of time decay --> but does it really exist if it is in the money?
2. Higher STT risk: Assuming that I forget to square off on expiry. O'wise I think liquidity may not be an issue and thus this may not be a big risk.
Am i missing something elementary?