Gold Options Trading Strategies

Gold Options TradingGold options are purchased as an option to gold futures contracts that do not oblige its purchasers but merely give them a right to assumer a call option or a put option depending on the type of contract they are buying into. By buying a gold option you are acquiring an additional power of choice giving you extra leverage. However, you might also be wasting your money if you choose to never take advantage of this option.

Gold options trading is done through two major mechanisms, calls and puts. A call option is mostly acquired by bullish traders or traders who believe that gold futures prices are on the rise. On the opposite side of calls are puts purchased by bearish traders assuming that gold futures prices are going down.

You can not only buy options, you can also sell them as many traders do on a regular basis. An option selling is one of the major gold options trading strategies. The main objective behind this strategy is to sell your option hoping that they expire unrealized and you can gain the profits.

Calls and puts are two major gold options trading strategies. However, there are some more advanced gold options trading strategies assumed by more experienced traders.

If you are a low risk low reward type of player, then gold options trading strategy called spreads might be ideal for you. Spreads basic strategy is based on buying and selling same class options with various gold options expirations dates at the same time. Spreads could be vertical, horizontal or diagonal in nature depending on which price and expiration date classes you pick.

To be successful in gold options trading you need to be able to read gold options quotes charts and have experience in gold futures trading.