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Commodity Option Trading Article
This is a selection made from among articles on Commodity Option Trading. For a permanent link to this article, or to bookmark it for future reading, click here.
Understanding Options Trading
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Like futures, an option gives you the right, but not the obligation, to buy an underlying stock at a specified price at a predetermined date in the future.
You earn a profit if the stock’s market value rises above the price by which you acquired your contract upon the agreement’s expiry. If the stock’s market value drops, then you lose your premium.
There are two forms of options: the call option and the put option. If you buy a call option, you are expecting your stock price to go up and you would prefer the put option if you expect the opposite, meaning you expect prices of your stock to decline.
You actually earn a profit regardless of whether the price of your stock goes up or down unlike other derivative instruments where you only earn a profit when the price of your stock rises.
Hedging strategies are used if you are not sure whether the price of your stock will rise or go down. In this case, you will opt to buy a Put option on your stock. If the price actually goes down, then you earn a profit, but if it goes up, you merely lose your profit.
It is also important to remember that if you think your stock will go down, it is best to sell your stocks and earn a profit from it and just purchase put options.
Another strategies traders engage in are selling their options before it expires to buy the underlying stock, let their contracts expire or sell their options. Selling options is actually not a problem as there are agencies responsible for buying these options in order to maintain balance in the system.
You might want to join options forums so you’ll have access to valuable tips that you may not otherwise find in trading books. There are also various online options trading sites that offer free tutorials as well as membership in the exchange.
Like most investments, you also need to be updated about the economy and the different business players if you want to buy options on stocks about their company. It is important to have a good gauge of which businesses to look out for and to trade on.
Armed with enough information, you will be ready to expand your money through online options trading.
In conclusion, if you are risk averse but would want to maximize your investments, then online option trading might work best for you. But of course, you have to equip yourself with as much knowledge as you can.
Commodity Option Trading Specific links
Commodity Option Trading News
The HedgeStreet Exchange Offers New Binary Options on Equity Index ... - MarketWatch
The HedgeStreet Exchange Offers New Binary Options on Equity Index ... MarketWatch - HedgeStreet is a secure, fully-transparent marketplace, subject to regulatory oversight by the Commodity Futures Trading Commission (CFTC). ... |
Turning Plowshares Into Put Options - Forbes
Turning Plowshares Into Put Options Forbes, NY - The oil sector wasn't the only commodity-related bubble to pop in 2008. The agribusiness group has suffered a hefty beating since the middle of the year as ... |
Trading and Investing in Gold: Futures, Options and the Delivery ... - Inside Futures
Trading and Investing in Gold: Futures, Options and the Delivery ... Inside Futures, IL - In addition to trading metals futures and options, you can also consider taking delivery of the physical products if you’d like to own them. ... |
Sounding Board - Wall Street Letter
Sounding Board Wall Street Letter, NY - A week ago, the Securities and Exchange Commission, the Federal Reserve Board and the Commodity Futures Trading Commission signed a memorandum of ... Harkin offers bill to reform trading of swaps |
Traders Renew Appetite for Risk as Obama Names Treasury Secretary - International Business Times
 AFP | Traders Renew Appetite for Risk as Obama Names Treasury Secretary International Business Times, NY - James A. Hyerczyk is a registered Commodity Trading Advisor with the National Futures Association. He has been actively involved in the futures markets ... CAD: BoC Carney Signals Further Rate Cuts Drop in Stock Market Sends Traders to the Safety of the US Dollar |