Equities Exposure to securities, for many, comes firstly via government public offerings and company employee share schemes, others will have exposure to the stockmarket through their pensions without even having a basic knowledge of how markets operate.
More and more people actively self-invest but few have mastered the art of short term investing namely trading. Whether you have been investing for a long time or you have just started, there is always something to learn and improve on, and you will find that there is much more to the stockmarket than stocks and shares.
What is a Stock? Some people like the feeling of ownership and being part of a companies future, buying physical shares in public companies comes with certain benefits namely income from dividends and rights to attend shareholder meetings as well as perks like discount on the companies products.
Futures Futures markets began by allowing farmers to sell their crop ahead of time before being harvested thus reducing the risk of the value being destroyed by unforeseen changes in the weather.
Today futures markets exist on a variety of commodities and instruments. Very few traders take delivery of the underlying product, most just profit from the fluctuations in price.
What is an Index Future? An index future is an instrument that tracks the indices be it Dow, Dax, Nasdaq or FTSE thus investment can be diversified across many markets and traders can profit from both strengthening and weakening markets. Futures markets tend to have extended hours so a market can be quoted overnight, this gives order and transparency to the opening of the regular market as all traders can see the impact of overnight world news by the movement of the futures market.
Options Options are very flexible tools once you master the basics. We will walk you through the key concepts, and once you've mastered that, we'll teach you about the more sophisticated concepts and strategies you can use.
Option markets are similar to futures markets, in that they give the holder the right to buy or sell the underlying instrument for a specific price on or before a specific date in the future, but options have some significant differences from futures, and are traded quite differently.
What is a Stock Option? Stock options are simply contracts that give the owner the right to buy (e.g., call option) or sell (e.g., a put option) a stock at a specific price at some time in the future. That price is called the strike price. The period of time could be as short as a day or as long as a couple of years, depending on the option
CFDs With CFDs you do not purchase the physical share, although you do benefit from dividend payments. Because CFDs are a derivative product you do not pay stamp duty on your purchases and like Futures CFDs are a leveraged product so you only need to have a deposit to hold a position.
Like Futures and Options you can benefit from a rising and falling market provided you have chosen the direction correctly. Because of the efficient dealing costs, CFDs have become a very popular alternative to buying share certificates.
What are CFDs? A CFD is a Contract For Difference, that is you have a contract with your broker for the difference between the price you purchased the contract and the price you sold it. In other words the difference in the price movement of your chosen share price, a profit would depend on the share moving in your chosen direction.
Spreadbetting Spreadbetting, like CFDs is another derivative product, a leveraged product which only requires you to have a small deposit to cover open positions. Unlike investment instruments with spreadbetting you are not holding shares in a company you are merely betting on the direction of the price of a share, commodity or index whether up or down.
Because spreadbets are classed as a bet and not an investment this type of activity is very tax efficient but for the same reason are only available in some countries.
What is a Spreadbet? A spreadbet is a bet on the direction of an investment instruments price and as such you have no rights or benefits to the underlying shares. Correctly picking the prices direction will result in a profit, picking the wrong direction will result in a loss.
3way Markets Limited is Authorised & Regulated in the UK by the Financial Services Authority. Registration Number: 509979
Tel: 01908 240200
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