Gold Futures and Options

Gold Futures

Gold Futures behave as any other futures and essentially are agreements to make or take delivery of a certain amount of gold of certain purity on a certain date at fixed price. When working with gold futures, the initial amount of money that the investor deposits with his broker is considerably smaller than the value of the gold specified in the contract. This means that the investor can have a great leverage using gold futures, but this also means that the risk increases as well.

Gold Options

Gold Options are contracts that give the investor the right to buy or sell gold of specific amount, on a prearranged date at fixed price. Gold options give the investor the right to buy or sell, but they do not obligate the investor to do so. Gold options are financial contracts, which offer a great deal of leverage to investors.

Gold Futures and Options

Both Gold Futures and Gold Options offer high level of leverage to investors, but with the increased leverage comes increased level of risk. Gold Futures and Gold Options are not for the average investor in general.