Options vs Futures

G

gvphubli

I read what are the differences between Options and Futures, what I am not understanding is to use Options or Futures when my case is

"I think MSFT (currently traded around 43) will go up, not sure how much, but will go up and want to allow a time period of 3-6 months"

With this situation, should I buy option or future.

If option - what strike price and expiration dates should I should consider (given the above scenario)

or if futures - what contract dates should I look at (I know these carry more risk than options)

Thanks,
 
When looking past a daytrade I find options somehow easier to keep holding.
Futures I have to watch minute by minute and close them quickly.
 
You can use both of them in that scenario, and also the underlying itself.

Things you can do much more easily with options is create a strategy that more closely defines what your position is. I don't really get, and maybe someone can explain, how you could use futures for things like downside risk or delta neutral stuff.

I think options are infinitely more flexible, but also much less liquid.

I don't actively trade either in any meaningful way, other than grabbing some out of the money puts so I sleep better when long an equity.
 
gvphubli said:
I read what are the differences between Options and Futures, what I am not understanding is to use Options or Futures when my case is

"I think MSFT (currently traded around 43) will go up, not sure how much, but will go up and want to allow a time period of 3-6 months"

With this situation, should I buy option or future.

If option - what strike price and expiration dates should I should consider (given the above scenario)

or if futures - what contract dates should I look at (I know these carry more risk than options)

Thanks,
More...

You should by the stock. You need to have a view on magnitude to use options.
 
Why Futures ? - simply because I see that the value of future increases with the value of the underlying asset/stock(and decreases with value). With options, I am confused as to use buy/sell PUT or CALLs to stay long on the stock, in my case MSFT.
 
You should trade options if you have a view on volatility. Since it looks like your view is on direction only, you should trade stocks or futures. The bid/ask spread on stocks is likely to be tighter than futures so, you should trade stocks.
 
If I trade stocks, I cannot leverage - isn't ? - as I understand margin trades are close at the EOD.

My questions is - I know the direction of the stock, and want some leverage and should be able to hold that position for about 3-6 months.
 
Your firm may be extending 4:1 margin intraday but at EOD, you will be using 2:1.

You trade stocks. Stocks on margin is the way to go.

If you find your strategies extremely reliable and you do major size, you might use stock futures to goose your leverage.
 
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