You can increase your profit potential even more and minimize your risk exposure at the same time if you invest your time to study and master CFD option trading strategies. This article
introduces and discusses some of the more popular strategies which you’ll find great use for whether you are a novice or experienced CFD options trader.
By doing so, you would create an opportunity window between $20 and $24. This is because if the price finishes within this range at the expiry time then you will receive profit payouts from both options. In addition, you would also significantly reduce your risk exposure because should the value of the price finishes outside this window at the expiry time then the profit of one of your options will almost totally negate the loss of the other.
However, although a stop-loss trading strategy looks quite simple at first sight, a successful one depends on the quality of your understanding and knowledge about factors such as risk
tolerance, trading asset, and your trading style and market conditions.
Consequently, this strategy will help you minimize your risk and allow you to support your trust in trading your selected asset. In addition, you could provide yourself with the opportunities
to compound your profits, maximize your returns and minimize your risk exposure. For instance, with the example just described you could achieve a double profit pay-out when your calculations is proven correct.
In addition, you also deduce that rivals, such as Apple, could suffer market share decrease which will have f negative influences on the values of their shares. Consequently, by following your fundamental and technical analysis to the fullest you should open a ‘call’ CFD option with Microsoft and a ‘put’ one with Apple.
This action will then provide you with the opportunity to collect double profits by taking advantage of the competitor relative value trade.
Many traders consider this to be a very powerful and effective CFD options strategy. Basically, the idea is to exploit the variance in the movements of commodities on the share values of companies that trade them.
For example, significant movements in the price of aviation fuel can seriously influence the share values of airline companies. Consequently, if you believe that a spike in the price of aviation fuel is imminent then you could consider activating a ‘call’ CFD option with this commodity as its underlying option. In addition, you could hedge this trade by opening a ‘put’ CFD option based on the shares of an appropriate airline because you are anticipating them falling in value as a consequence of this development.
In summary, if you take your time to evaluate CFD options strategies such as those described above then you will find that this is a rewarding undertaking that could significantly boost your profits. This is because you can then provide with opportunities to compound your profits within the same time frame whilst minimizing your risk exposure in the process.
You will find by analyzing Duxa Capital CFD options trading platform that it has been specifically designed with this purpose in mind. You will be very impressed about the quality and quantity of the impressive trading strategies and tools which are available to all Duxa Capital clients especially.
The following CFD options strategies will now be explained with this intent in mind. They should help you improve your trading results under a number of different market conditions:
For example, your technical analysis indicates that oil is very likely to increase from its current value of $110 over the short term. You are also aware that you will be entitled to an 87% profit if you open a ‘call’ CFD option with Duxa Capital using oil as its underlying asset. In addition, you also precisely know your risk exposure because if you finish out-of-the-money, you will receive a refund between 10% and 15%.
You next choose to deposit an investment of $1000 and opt for an expiry time of 30 minutes. That is it? These are all the decisions that you have to make. Now, when your expiry time expires and if the price of oil is just $1 higher than your opening or strike value, you will earn a profit of $780 in just 30 minutes.
This is a fantastic return for what appears to be a small risk exposure and with minimum effort. However, like any investment decisions you must ensure that you fully understand your objectives and risks before activating any new trades. In this respect, your goals and risks are well-defined as compared to other investment types. In summary, despite all benefits of trading using CFD options, you should always work and adhere to a well-developed trading strategy.
For example, your technical analysis indicates that the EUR/USD currency pair is very likely to decrease from its current value of 1.4000 during the next few hours. You are aware that you will be entitled to an 87% profit if you open a ‘put’ CFD option with Duxa Capital using the EUR/USD as its underlying asset. You also know precisely what your risk exposure is because if you finish out-of-the- money at expiry time then you will receive a refund between 10% and 15% of your initial deposit.
You next choose to invest a deposit of $2000 and opt for an expiry time of 1 hour. Now, when your expiry time expires and if the price of EUR/USD is just 0.0001 below your opening or strike value, you will earn a profit of $1560 in just 1 hour.
After you have mastered the basics of CFD options trading and are proficient at operating simple strategies such as the bull and bear ones just defined, you could consider learning how to use more sophisticated strategies such as the following one.