Options give you the right to buy or sell something (called the underlying) at a predefined price.
The first use of options dates back as far as 500 B.
C.
when the Greek philosopher Thales bought the right to use olive presses.
During the rich harvest the demand for using olive presses raised and Thales was able to resell his rights at a much higher price.
However, in case of a scanty harvest Thales would have lost his investment.
Options have a considerable leverage that can give you high profits but can also ruin your entire investment.
In modern finance an option is usually a right to buy or sell shares at a fixed price.
But of course this right does not last forever.
It's important to know that time is always against you.
Options usually have an expiry date and with every day passed it will lose time value.
This is because the shorter the lifetime of the option the less likely the price of the underlying share will move into the favorable direction.
Do you want even higher profits and do you like it even more risky? Then we should talk about futures.
With futures, your potential loss is not limited to your investment but it can actually be even more.
Futures offer extreme leverage and small movements of the underlying can bless you with high profits or strike you with considerable losses.
Why is that? Because when you're trading futures you're not actually buying or selling them.
When you open a trade you pay an initial margin which is only a few percent of the actual value of the future contract.
Every day the profits will be credited and losses of course will be debited from your margin account.
If your margin balance gets too low your broker will send you a margin call telling you to deposit more money.
So as you see the risk is very high when trading these types of instruments.
Yet on the other hand the possible profits are extremely tempting.
If you think trading options and futures is a nice and easy way to get rich fast you'd better reconsider.
If it was so easy, why would the traders work for their banks instead of just quitting their jobs and trading futures at home? Think about it.
To trade successfully you'll need a few things such as

• A trading strategy to follow
• Ability to keep emotions out of your decisions
• A lot of time to watch the markets closely

Now what trading strategies are there and which one should I use? The chart analysis uses various system and techniques to try to predict future prices from past price movements.
The following list presents you a quick overview

• Classical chart analysis
• Candlestick patterns
• Elliot-Wave theory

There are many more of course but these are certainly among the most important and best known strategies.
It's beyond the scope of this article to go into the details of these strategies but you will find plenty of information about it on the net.
It's vital to know that these strategies are based on the belief that price movements can be predicted with a certain probability.
I deliberately use the word 'belief' because there is no scientific approach to it.
The other type of market analysts believes that price movements are absolutely random and unpredictable.
Following this idea it's essential to have your portfolio well diversified.
But no matter what trading strategy you use, diversification is the key to mitigating investment risks.
Remember, there is no such thing as fast and easy money.
High profits and high risks always go hand in hand.
If you're trading you should always be aware how much you can lose, especially when trading futures and you should never trade with money you can't afford to lose.