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Trading Commodity Article
This is a selection made from among articles on Trading Commodity. 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.
Trading Commodity Specific links
Trading Commodity News
Commodities Collapse: Fast, Big and Still Going - Wall Street Journal
Commodities Collapse: Fast, Big and Still Going Wall Street Journal - "All of commodities are collapsing," said Frank Lesh, futures analyst and broker at FuturePath Trading. "The oil charts are bearish. I expect commodities to ... |
Economic gloom, oil push US, EU grains lower - guardian.co.uk
 CEP News | Economic gloom, oil push US, EU grains lower guardian.co.uk, UK - ... in crude oil prices and pressured by renewed uncertainty in financial markets and worries of reduced commodity demand. At the Chicago Board of Trade, ... GRAINS-US, EU grains ease on low demand, economic worries Fundamentals Remain Weak CBOT Soy Outlook:Lower On Outside Mkts, Lack Of Fresh Support |
SOCAR Selects Triple Point for Oil Trading and Risk Management - EON
SOCAR Selects Triple Point for Oil Trading and Risk Management EON, WA - In addition to Triple Point's award-winning commodity and energy trading software being used by more than 25 percent of both Global 500 commodity trading ... |
CME Trading Slumps; ICE Sees Gains - Wall Street Journal
CME Trading Slumps; ICE Sees Gains Wall Street Journal - ... platform more than offset declines of 5% and 45%, respectively, in European and Canada as oil trading slowed amid the commodity's slumping prices. ... UPDATE 1-CME November volume slumps 29 pct on year CME Group November Trading Volume Down 29 Percent From Last Year CME Lists Hardwood Pulp Futures, Options |
UPDATE 1-CBOT wheat contract changes approved - Reuters
 Illinois Farm Bureau | UPDATE 1-CBOT wheat contract changes approved Reuters - By Christine Stebbins CHICAGO, Dec 4 (Reuters) - The Commodity Futures Trading Commission has approved changes to the Chicago Board of Trade wheat contract ... CME Group Receives Regulatory Approval for Changes to Wheat Contract CME Group Receives Regulatory Approval for Changes to Wheat Contract |