Gold Options, Futures and Spread Betting

Gold options and futures are another option. This market deals in speculation rather than in actual gold investing, and are highly complex structured products. Derivatives, forwards, futures, options and spread betting are short term speculations on the future price of gold. They are financial instruments - used by day traders, hedge funds and institutionals for short term speculation -  which derive their value from or whose price is dependent on the underlying asset. Investors do not directly own or have a right to take possession of the underlying bullion asset. Leverage substantially increase investment gains but also increase risk as if the price goes against the purchaser they may be subject to a margin call. There is significant leverage involved with derivatives and they are thus considered risky for non professionals, as the loss potential is very high.

Spread betting is a costly option and only suitable for day traders and speculators. High leveraged risk. Need to monitor trading constantly. Overnight open positions carry excess risk.

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