Trading options in Dubai
A resident of Dubai can trade options on New York Stock Exchange / NASDAQ, London Stock Exchange or Stock Exchange of India Limited (SEIL)/ Bombay stock exchange.
If you are not a resident of Dubai, it might not be easy to set up an account with any of these exchanges for trading purposes. In this case, one does have other choices such as FOREX and also CFD’s
If you wish to go ahead with them, please note that there will be brokerage charges that vary from broker to broker and instrument to instrument.
For more information on fees, please check out your respective websites. Please do thorough research before executing any trade as high brokerage charges also lead to high risks in trades.
Dubai is a lively and happening city, and there are lots of options for traders to try out their luck here.
Legal and illegal ways to trade and make money
Unlicensed stock trading
Since Dubai is still an emerging market, it does attract large amounts of speculative investments from all over the world.
It causes many small investors like students, homemakers, etc., to invest in stocks with no prior knowledge about how trading works or what is required!
Although they find it exciting to buy shares at 25 cents per share and sell at 50 cents per share the next day, the fact is that they are highly illiquid, thinly traded stocks.
This results in massive losses for these traders as there is no support by any regulatory body to mediate between buyers & sellers.
Many unregulated internet sites claim to provide the best deals on stock trading.
They claim to have good connections with brokers and offer sweet deals to traders like free call credit ( something like one can talk free via IDD to the USA), 100% refund of brokerage fees etc. One needs to be very cautious while dealing with such offers.
Most of them end up giving you fake cheques, dubious debit cards or bank accounts that do not exist after making initial payment or not withdrawing money deposited initially.
Also, one needs to be very aware of scammers who dupe traders by promising them exciting deals on trading!
Speculation & arbitrage
This is probably the oldest form of trading, where traders/investors speculate on the future movement of prices of stocks or commodities via derivatives like call/put options.
Price movements are due to lots of factors like economic trends, political events, weather conditions etc.,
One can profit from price speculation via cash settlement or taking opposite positions in Futures & Options markets worldwide.
It does require experience and good knowledge about the market, but if executed with care, one can earn handsome returns using this route.
Trading options is like buying insurance for your investments and giving you the right but not obligation to buy/sell a product at a specific price!
This option can be of two types – Call option or Put option depending upon which direction the price moves.
You can buy a Call option if you expect the underlying stock price to go up and sell/write/short a Put option if you expect the underlying product price to fall.
Futures and hedging
This is an advanced form of options trading, where one does not just buy or sell an option but takes simultaneous positions in Futures and Options markets worldwide to lock in his gains/losses before time/event expires!
At times it becomes challenging to deal with this complex subject due lack of awareness among traders.
In Dubai, a few brokers offer these services, and the most common one is Future General Trading Co. LLC, which also has its training academy to teach beginners about trading options!
If you need to take positions in international markets like commodity futures and options, You will have to use one of the reliable & reputed brokers!
It stays your choice to choose the trading option that suits you the best in the end. Make sure to choose wisely.
Link to this official site for more information.