Benefits and Pitfalls of Buying Long Term Commodity Options
Buying long term commodity options sure makes sense to many traders who have fallen victim to options expiring time after time. Buying more time has many advantages, but this also comes with a steep price.
Conservative Futures Option Strategies
Trading futures options is often a more conservative approach than trading futures contracts, but you can go a step further and find even more conservative option strategies with option spreads.
Managing Risk When Trading Futures Options
Whether you are buying options or selling options, controlling your risk in either situation is critical to long-term profitability. Selling options certainly entails more open ended risk, but the option time decay problem presents a great deal of risk for option buyers.
Commodity Option Credit Spreads
Option credit spreads involve selling an option that is nearer to the money and buying an option that is further out of the money. The simultaneous opening of both positions creates what is called an option spread. Actually, you don’t have to open them at the same time, but it is recommended.
Nadex - Another Way to Trade Commodities
Nadex is a commodity exchange regulated by the CFTC, which trades binary options on commodities like gold, silver, oil corn and soybeans. The contract are an all or nothing outcome, similiar to a bet where you either win it all or lose it all.
Trading Options on a Limit Up Day
A limit up move in a futures market can either be a very good thing for you or a very bad thing depending on which side of the market you are trading. A limit move is the maximum price a futures contract can move in one trading day. You can get trapped in a bad situation, since you can’t close out your losing position on a day like this, but...
Knowing Which Commodity Options to Buy
You can get lost in the selection of the commodity options you can buy. Options trade in different months and each month has a wide range of strike prices. There are also calls and puts, where is a bet on the commodity price rising or falling. There are hundreds of different options you can buy on each commodity and your decision could be the...
Time Decay Of Futures Options
Time decay of futures options is a major factor option traders must consider before they buy a futures option contract. Time decay of options means that options theoretically lose money every day, since they have a limited life.
Using Futures Options to Lower Risk When Trading Commodities
There are many ways to utilize futures options to lower your risk when trading commodities. Here are some examples of futures option strategies where you sell options against eother option positions or buy options to protect against downside risk in futures positions. These strategies could lower your overall trading risk and help you become...
Where To Find Futures Options Quotes
Futures Option Quotes is often more difficult than one might expect. Here is one online source that offers free online futures quotes on most commodity and futures markets.
How To Trade A Bull Call Option Spread
The Bull Call Spread is one of the most common futures option spreads. It is fairly easy to understand how the option spread works and to place this option trade.
Dangers of Buying Out-Of-The-Money Options
Buying out of the money futures options is often a risky trading strategy due to the time decay. A look at the pitfalls of buying out of the money futures options and some trading strategies you can use to improve you odds.
Beneficial Strategy of Selling Options on Futures and Commodities
The benefits of an option selling strategy for trading the futures and commodities markets. The odds are in your favor by selling options but you also have to control the risk.
Selling Options in the Futures and Commodities Markets
An explanation of selling options in the futures and commodities markets. Selling futures options is an option strategy used by many professional commodity traders.
Buying a Put Option
The strategy of buying a put option in the futures and commodity markets. When to use this option strategy, the risks and benefits compared to buying a futures contract.
Buying a Call Option
The strategy of buying a call option in the futures and commodity markets. When to use this option strategy, the risks and benefits compared to buying a futures contract.
Futures Options – The Basics
Learn the basics of futures options including calls, puts, premium and strike price.
Quotes on Futures Options
FutureSource.com is a free online service for futures and option quotes. Follow this link and select the market you want a quote on. On the next page, click the middle icon in the far left column to pull-up the option quotes.
Bear Put Spread - Futures Option Strategy
The bear put option spread requires buying a put option that is typically at the money and selling another put option that is out of the money. You can use a wide variety of strike prices to suit your trading goals, but the option you buy must be closer to the money and the option you sell must be further out of the money.
Futures Option Straddle – Option Strategy For Big Move In E…
An option straddle is the simultaneous purchase of a call and put option normally at the same strike price. If you were ever expecting a big move in a commodity but didn’t know which direction, the option straddle might be the right strategy to use.
Trading A Futures Option Short Strangle
An option short strangle is an option strategy where a trader will simultaneously short (sell) an out of the money call and an out of the money put on the same commodity with the same expiration month. A commodity trader might want to use this strategy if he or she expects a market to stay in a fairly narrow trading range until the options reach expiration.
Buying Commodity Options In Volatile Markets
Buying commodity options can be very risky if you buy at the peak of a buying frenzy where premiums are very high.