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I am taking a hard look at options trading and I am starting with a modest account of $10,000 (I mention this because I think it might be relevant to the question).

What is the difference between trading something like a gold ETF (like GLD) and the futures contract for gold (like /GC on most platforms). What should I be considering before choosing one over the other? Is one favorable over the other? Note that I mean this question not just for gold, but also other ones like choosing /NG over UNG, etc.

From what I can tell, it seems like the futures market might have better overall liquidity than the ETFs and I can control my losses on each with defined-risk strategies. So why wouldn't I want to use the futures market instead of the ETF? What am I missing here?

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  • Futures are delivery contracts and not physical holdings. Futures can be held with minimum margin deposits or they can be held with excess margin. Futures have either contango or backwardation. Futures trade from 6 PM Sunday to 5 PM Friday with just a one hour break each day from 5 PM to 6 PM
    – S Spring
    Oct 3 at 16:27

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