I was reading Nithin Kamath’s comments on this page ( http://zerodha.com/z-connect/queries/stock-and-fo-queries/trading-india-vix-simplified ) where he replied to another commenter’s question and said: “Definitely better to be in options than futures.”
Why is it so? Aren’t options more complicated than futures and more difficult to get a grasp on? And for the same reason, wouldn’t liquidity be more of an issue for options compared to futures?
Nilesh, the question was, what is better to trade to an election result day. If markets are expected to be volatile and news determines the side of the move, buying options are better as the risk is limited and known upfront.
If you are trading Nifty options, liquidity is no issue at all. Yes, some stock options don’t have much liquidity.
Deciding to trade future options is one of the first decisions new commodity traders make. Many existing commodity traders also waffle back and forth on this issue as to which is better method for trading Some traders like to focus one or the other. It is best to fully understand the characteristics of each in order to decide how to trade commodities.
@alina
There are no options in commodities