Is The American Futures Options Market A Good Place To Learn About The Stock Market?

Although futures contracts have been in existence since the mid 19th Century, futures options are a relative innovation by comparison.

Futures options only came into being in 1982, initially being offered in a U.S. government pilot programme. Despite the comparatively high risk involved in futures options trading, the concept took off big time. Such was the popularity that options were extended from financial futures to include agricultural commodities as well.

As a means of getting to know the ropes, futures options are not the answer. Futures options are a high risk, speculative market that is no place for the complete novice.

Even though the purchase of options on futures contracts involves a limited risk (losses are limited to the costs of purchasing the option), it is nonetheless possible to lose your entire investment in a short period of time. And for investors who sell rather than buy options, there is no limit at all to the size of potential losses.