15 min
The Difference Between Future Options and Stock Options - 104 The Option Genius Podcast: Options Trading For Income and Growth
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- Investing
Before we get into this episode, I did want to remind you that we have Futures Options Live coming up July 30, it's going to be an all day seminar, virtual Zoom event where we're going to be teaching and talking and answering questions all day long. It's gonna, if you haven't been if you don't anything about futures options, and this episode will be great to listen to, to get some understanding a little bit, but we're gonna go deep, deep, deep on Friday, and tickets are going really fast. Hopefully, there are still tickets by the time you hear this. But if you go to FuturesOptionsLive.com that's where you get more information, FuturesOptionsLive.com, and the link will be in the show notes. Now, let's hit the music and on the other side, we're going to be listening to the difference between futures options, and stock options.
So what are the difference between futures options and stock options? We get this question a lot, because I do have a Oil Trading Program and oil is a futures. And I talk about it a lot, because it's one of the favorite ways to trade. But really quickly, I wanted to go over and there are several reasons I'm going to give you the top three, you know what now I'm going to give you the top four, let's give you a bonus, right, the top four differences between futures options and stock options. Now, I do still trade stock options. And I probably always will. But by adding futures options to it to my investments, and to my portfolio, to my strategies, it's really been amazing. It's given me really, really great diversification, it's given me a lot more fun in my trading. And it really adds another element and another way to generate income and passive income really, that, well, let's get into the differences and you can see for yourself.
So number one, the numbers are bigger when you're trading futures options. And there's a couple of different reasons for this. And the numbers being bigger. I mean, they're all all the numbers are bigger. Number one, there's more leverage. Okay, so now, when you're talking about stock options, you're talking about a regular trading account, they have something called portfolio margin. So this is for those traders who have over 100, 130, 150, I don't know how much the limit is. It varies by broker, but you need somewhere over $100,000 in your regular trading account. And you have to have a lot of experience in order to qualify for something called portfolio margin. Regular margin accounts, you know, when you buy stock they give you, if you buy, you know, you have the money for one stock, they'll let you buy two shares, that's 50% margin, that's what normal accounts are. Portfolio margin - they'll give you five times. So if you have you for buying one stock, they'll give you the the let you borrow the money to buy five shares. So it's like five times bigger. Now, that in stock world that only happens if you have portfolio margin. In the futures world, they have something called span leverage, which is very similar to portfolio margin.
And everybody gets that right off the bat. So you have more leverage, right when you start. What does that mean? Well, it means that the premium for every option is higher. So you can make a lot more money per contract, than you can in the stock market world for the same amount of risk. And secondly, you can spend less time in each trade, because you can hit your goals much faster. So if you have a profit goal, hey, I'm gonna make 10% when make 15% whatever it is, you can hit that way, way, way in advance. Okay, so in my Oil Options account, my goal is to make 10% on the account every single month, and whatever trades I put on, I'm usually in and out of them in two weeks. So compare that to my iron condors. Right? I'm also trying to make 10% on my iron condor, but I'm usually in there for 30, 35 days, sometimes 45 days. So it's much sooner, much quicker, because the numbers are bigger. The other difference where the numbers are bigger is th
Before we get into this episode, I did want to remind you that we have Futures Options Live coming up July 30, it's going to be an all day seminar, virtual Zoom event where we're going to be teaching and talking and answering questions all day long. It's gonna, if you haven't been if you don't anything about futures options, and this episode will be great to listen to, to get some understanding a little bit, but we're gonna go deep, deep, deep on Friday, and tickets are going really fast. Hopefully, there are still tickets by the time you hear this. But if you go to FuturesOptionsLive.com that's where you get more information, FuturesOptionsLive.com, and the link will be in the show notes. Now, let's hit the music and on the other side, we're going to be listening to the difference between futures options, and stock options.
So what are the difference between futures options and stock options? We get this question a lot, because I do have a Oil Trading Program and oil is a futures. And I talk about it a lot, because it's one of the favorite ways to trade. But really quickly, I wanted to go over and there are several reasons I'm going to give you the top three, you know what now I'm going to give you the top four, let's give you a bonus, right, the top four differences between futures options and stock options. Now, I do still trade stock options. And I probably always will. But by adding futures options to it to my investments, and to my portfolio, to my strategies, it's really been amazing. It's given me really, really great diversification, it's given me a lot more fun in my trading. And it really adds another element and another way to generate income and passive income really, that, well, let's get into the differences and you can see for yourself.
So number one, the numbers are bigger when you're trading futures options. And there's a couple of different reasons for this. And the numbers being bigger. I mean, they're all all the numbers are bigger. Number one, there's more leverage. Okay, so now, when you're talking about stock options, you're talking about a regular trading account, they have something called portfolio margin. So this is for those traders who have over 100, 130, 150, I don't know how much the limit is. It varies by broker, but you need somewhere over $100,000 in your regular trading account. And you have to have a lot of experience in order to qualify for something called portfolio margin. Regular margin accounts, you know, when you buy stock they give you, if you buy, you know, you have the money for one stock, they'll let you buy two shares, that's 50% margin, that's what normal accounts are. Portfolio margin - they'll give you five times. So if you have you for buying one stock, they'll give you the the let you borrow the money to buy five shares. So it's like five times bigger. Now, that in stock world that only happens if you have portfolio margin. In the futures world, they have something called span leverage, which is very similar to portfolio margin.
And everybody gets that right off the bat. So you have more leverage, right when you start. What does that mean? Well, it means that the premium for every option is higher. So you can make a lot more money per contract, than you can in the stock market world for the same amount of risk. And secondly, you can spend less time in each trade, because you can hit your goals much faster. So if you have a profit goal, hey, I'm gonna make 10% when make 15% whatever it is, you can hit that way, way, way in advance. Okay, so in my Oil Options account, my goal is to make 10% on the account every single month, and whatever trades I put on, I'm usually in and out of them in two weeks. So compare that to my iron condors. Right? I'm also trying to make 10% on my iron condor, but I'm usually in there for 30, 35 days, sometimes 45 days. So it's much sooner, much quicker, because the numbers are bigger. The other difference where the numbers are bigger is th
15 min