Straight Option

Instead of trading options directly, traders in the UK have the option of using spread betting and contracts for difference (CFDs) to speculate on the values of options. You will never be required to deliver or accept delivery of the underlying asset since distributed bets and CFDs are cash-settled at the end of the trading day. However, both of them are examples of leveraged kinds of options trading. This implies that in order to initiate your trade, you will be required to pay a lesser deposit, which is referred to as margin, but your profits or losses will be determined based on the entire amount of your position. Therefore, it is possible for you to lose (or win) a significant amount further than your initial payment. When you buy call options from us as spread bets or contract for difference (CFDs), your risk is always constrained to the margin that you paid to begin the position. Please keep this in mind. When you sell call options, however, the amount of risk you take on might be endless.

Trading contracts for alternative and options differ with regard to the underlying mechanics of the contracts themselves. When you enter into a contract for difference (CFD), you are making a binding agreement to swap the difference in the amount of an asset between the time you open your position and the time you close it. When you buy or sell an option, you are purchasing or selling the right (but not the responsibility) to transact in a certain asset at a predetermined price. A contract for difference, or CFD, is a type of financial derivative in which you make an contract to swap the difference in the price of an asset between the time you initiate your transaction and the time you close it. You can speculate on an upward movement in price by purchasing a contract for difference (CFD), or you can speculate on a downward movement in price by selling a CFD. The amount that you win or lose on each transaction is directly proportional to the amount that the underlying asset fluctuates. In addition to being a type of financial derivative, a contract can also be in the form of an option. However, rather than agreeing to trade the difference in price between two assets, you are purchasing or selling the chance to trade the assets at a predetermined price for a certain amount of time.

·         Learn the ins and outs of spread betting
·         Get in on Contracts for Difference (CFDs) for Option Trading
·         Options traded using CFDs are identical to the underlying options deal, much like spread bets.

To trade CFDs, you need a margin trading account with a broker such as IG. Learn more about Contracts for Difference trading.

A broker is used to trade options.
Options that are “listed” can be bought and sold on the same stock exchanges as the underlying shares. Most retail traders in the United Kingdom will use a broker when trading options because of the high barrier to entry involved in trading options directly on an exchange.

You place your order with your broker on their platform, and they handle placing it on the exchange and collecting the commission for you.