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Platinum Options

A platinum option gives an investor the right (but not the obligation) to buy or sell a specific amount of platinum at a fixed price (strike price) on a designated delivery date. Unlike a platinum futures contract, the platinum options contract holder do not have the obligation to buy or sell the underlying platinum. Hence, the options buyer's downside risk is strictly limited to the cost of the option - i.e. the premium plus any transaction costs.

Thus, the advantages of buying platinum options is that they provide financial leverage as well as downside risk protection. The disadvantage of options is that they can expire worthless if price of platinum does not appreciate beyond the strike price within the llifetime of the option.

What was described in the preceding paragraph is just a very simplified example on how to trade basic call options. For the novice investor, options trading can be a rather complicated subject. A good site to learn more about options trading is www.theoptionsguide.com.