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Trading Commodities, Commodity Options and Currencies (Collection) by Carley Garner, Paul Brittain

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chapter 13Margins and Option Trading

There is a lot more to commodity option trading than knowing the difference between a call and a put or even understanding the basics of the futures markets. Unlike stocks, which for the most part require that traders have the cash available to pay the face value for each security or option trade they execute, futures traders are able to borrow buying power from the exchange to execute trades.

While some stock traders are granted the ability to borrow from their brokerage firms, they are required to pay hefty interest charges and often have to jump through hoops for permission to do so. Futures traders, on the other hand, are simply required to put down a “good faith deposit” of a fraction of the ...

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