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Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. You could lose more than your original investment. Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. You could lose more than your original investment.

Whatever happens, it’s good to have options

Whoever’s policies win the day, however the markets react, make more of the land of trading opportunity with our new, award-winning1 US Options and Futures platform.

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Bullish, bearish, whateverish?

Four potential scenarios, four ways to potentially profit. Learn how different options trading strategies can give you the upper hand, whatever your outlook.

  • Covered call
  • Long put
  • Long straddle
  • Iron condor

What if markets rally?

Possible strategy: Covered call
Bias: Neutral to slightly bullish

A Covered call strategy is a smart way to potentially enhance returns when you already own a stock and expect the market to rise moderately but not past the strike price.

How it works:

You own shares of a stock and then sell a call option on those shares. This means you’re giving someone else the right to buy your stock at a predetermined price (the strike price) before or on a certain date.

  • Max Loss: As you also hold the shares, there is a risk of losing money on that shareholding if the price moves against you. This is partially offset by the premium received for selling the call, but if the underlying price slumps to zero, you'd lose the whole investment (less the premium).

  • Max Profit: You earn the premium from selling the call option, which adds to your income. If the stock doesn’t rise above the strike price, you keep both the premium and your shares.

Why use it when you expect markets to rally?

When you expect a moderate increase in a stock’s price, a covered call strategy can be a great way to generate extra income. You still benefit from owning the stock as it appreciates, and the premium from selling the call option provides additional profit. This strategy is ideal for maximising returns in a slightly bullish market while managing risk.

Covered call Source: IG.com
Covered call Source: IG.com

What if markets slump?

Possible strategy: Long put
Bias: Bearish

A Long put strategy is used to potentially enhance returns when you believe a stock’s price is about to drop.

How it works:

You buy a put option, which gives you the right to sell a specific stock at a predetermined price (the strike price) before or on a certain date.

  • Max Loss: The most you can lose is the cost of the option itself (known as the premium).

  • Max Profit: If the stock’s price falls significantly below the strike price, you could see substantial profits.

Why use it when you expect markets to slump?

When you anticipate a specific stock's price will fall, a long put strategy can be your best friend. It allows you to profit from the decline while keeping your risk limited to the premium paid. This makes it a useful tool for protecting your investments or even capitalising on a bearish market outlook.

Long put Source: IG.com
Long put Source: IG.com

What if markets are unpredictably volatile?

Possible strategy: Long straddle
Bias: Bullish/Bearish

A Long straddle strategy could be your go-to move when you expect big market swings but aren’t sure which direction prices will go.

How it works:

You simultaneously buy both a call option and a put option on the same stock, with the same strike price and expiration date. This means you’re positioned to profit whether the stock price goes up or down.

  • Max Loss: The most you can lose is the combined cost of buying both options (the premium).

  • Max Profit: If the stock price makes a significant move in either direction, whether it’s a sharp rise or a steep drop, you stand to make substantial profits.

Why use it when you expect markets to be volatile?

When you expect markets to be highly unpredictable, with the potential for large price movements, a long straddle strategy allows you to capitalise on that volatility. Whether the market trends upward or downward, you’re covered. This makes it an option for times when you expect a major shift but can’t predict the direction, ensuring you’re ready to profit no matter how the market moves.

Long straddle Source: IG.com
Long straddle Source: IG.com

What if markets drift?

Possible strategy: Iron condor
Bias: Neutral

An Iron condor strategy can be a smart way to profit when you expect the market to stay calm and trade within a specific range.

How it works:

You create an iron condor by selling one out-of-the-money (OTM) call and one out-of-the-money (OTM) put while simultaneously buying a further OTM call and a further OTM put. This creates a range in which you can profit.

  • Max Loss: The risk is limited to the difference between the strike prices of the options, minus the net premium received. However, your potential loss is capped due to the protective options you’ve bought.

  • Max Profit: If the stock price stays within the range set by the sold options, you keep the net premium from selling the options, which is your profit.

Why use it when you expect markets to drift?

When you expect markets will be quiet and trading sideways with little volatility, an iron condor strategy allows you to earn income from the premiums received by selling the options. As long as the stock price stays within the defined range, you profit. This strategy is designed for low volatility environments where you don’t expect significant price movements, making it an excellent choice for generating steady returns in stable markets.

Iron condor Source: IG.com
Iron condor Source: IG.com

US-listed options strategy guide

The 10 options strategies every trader should know:

A sleek showcase of 10 options trading strategies

Their individual applications and risk profiles

A clear explanation catering to all levels of experience


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Choose a new way to trade US-listed options and futures

Our brand new US Options and Futures account combines the best of IG’s market-leading service with tastytrade’s award-winning specialist technology and content.

The best platform for options trading1
A multi-award-winning, specialist trading platform built by options experts at tastytrade

Round-the-clock support
Give us a call whenever you need, 24 hours a day, from 8am Saturday to 10pm Friday (UK time)

Low, transparent commissions
Trade options from $1.00 per contract to open, capped at $10.00 per leg, and $0 to close

A strategy for all conditions
Options can be used not only to take a bullish or bearish position but also to take advantage of sideways movements and non-directional volatility

Inspirational content
From easy-to-follow ‘how to’ guides, to the best in live and on-demand programming from the tastylive network

Cash and margin accounts
Choose what’s right for you: a cash account for non-leveraged exposure,2 or a margin account to access a wider range of products and strategies*

* Futures are only available in a margin account

Open an options and futures trading account

To open a US-listed options and futures trading account with us, you can follow these steps:

  1. Do your research to get an understanding of how options and futures work

  2. Create a trading account or log in

  3. Click on the ‘add an account’ tab in My IG

  4. Complete the US-listed options and futures account-opening form

A trader’s guide to the US election

For more actionable trade ideas to help you make the most out of the US election, check out our expert analysis.

Markets to watch

Which markets are affected by the US elections

Here are some of the financial markets that could likely be impacted by the 2024 US presidential election:

Stocks and indices

Commodities

Forex

SPY (S&P 500 ETF), SPX (S&P 500 Index): The broader stock market, represented by SPY and SPX, may experience volatility leading up to and following the election, particularly in sectors sensitive to policy changes (e.g., healthcare, energy, and technology).

GLD (Gold ETF): Gold is often seen as a safe-haven asset, so uncertainty or market volatility surrounding the election could drive demand for gold, increasing the price of GLD. If the election results lead to expectations of inflation or a weaker dollar, gold could see further gains.

Currency pairs (e.g. GBP/USD, EUR/USD, USD/JPY): Key currency pairs like GBP/USD, EUR/USD and USD/JPY could be particularly volatile. A weaker dollar could lead to a stronger pound, euro or yen, while a strong dollar scenario would likely push these pairs lower.

QQQ (Nasdaq-100 ETF): Technology stocks, which are a major component of QQQ, could react strongly depending on the candidates' stances on issues like antitrust regulation and data privacy. A pro-business candidate might boost tech stocks, while a more regulatory-focused candidate could introduce uncertainty.

CLV (Crude oil futures): The energy sector, particularly oil (represented by CLV), may react to the election based on the expected energy policies of the new administration. A candidate favoring fossil fuels could support oil prices, while a focus on renewable energy might pressure them.

Markets to watch

Stocks and indices

SPY (S&P 500 ETF), SPX (S&P 500 Index): The broader stock market, represented by SPY and SPX, may experience volatility leading up to and following the election, particularly in sectors sensitive to policy changes (e.g., healthcare, energy, and technology).

QQQ (Nasdaq-100 ETF): Technology stocks, which are a major component of QQQ, could react strongly depending on the candidates' stances on issues like antitrust regulation and data privacy. A pro-business candidate might boost tech stocks, while a more regulatory-focused candidate could introduce uncertainty.

Commodities

GLD (Gold ETF): Gold is often seen as a safe-haven asset, so uncertainty or market volatility surrounding the election could drive demand for gold, increasing the price of GLD. If the election results lead to expectations of inflation or a weaker dollar, gold could see further gains.

CLV (Crude oil futures): The energy sector, particularly oil (represented by CLV), may react to the election based on the expected energy policies of the new administration. A candidate favoring fossil fuels could support oil prices, while a focus on renewable energy might pressure them.

Forex

Currency pairs (e.g. GBP/USD, EUR/USD, USD/JPY): Key currency pairs like GBP/USD, EUR/USD and USD/JPY could be particularly volatile. A weaker dollar could lead to a stronger pound, euro or yen, while a strong dollar scenario would likely push these pairs lower.

Top tips for trading the US election

  • Be careful on relying on poll predictions beforehand. They are important, but these are only a guide

  • Expect plenty of volatility throughout the night as each state declares the results

  • Expect key levels to get tested more easily following the news released and when liquidity is higher

1 Best broker for options trading 2024– Investopedia, Best platform for options trading 2024 – ADVFN, Best online broker for options trading 2024 – Forbes
2 Leveraged products such as spread bets, CFDs and US-listed futures are complex financial instruments, with which an upfront deposit – called margin or buying power – is used to open a larger trade. Your margin will only be worth a certain percentage of your trade, but potential profits and losses will be calculated based on the total position size, not your margin. This makes leveraged trading inherently risky and should never be approached without a trading strategy and adequate risk management in place. Options positions aren’t fully cash-secured (eg you aren’t necessarily required to put up the buying power in full upfront) in a margin account. In a cash account, options trading is non-marginable (ie you can’t borrow cash to establish positions, so you’ll commit the full value of your trade upfront).