Commodity Options: Trading and Hedging Volatility in the by Carley Garner

By Carley Garner

Don’t fail to spot Today’s most popular buying and selling enviornment: Commodity techniques!


“The authors have written the definitive paintings on buying and selling commodity ideas. Their in-depth wisdom of this topic is known between pros and specialist investors alike, and their skill to relay their wisdom via textual content, photographs, and the spoken be aware is remarkable in our industry.”

Lan Turner, CEO, Gecko software program, Inc.


“This booklet captures the realities of commodity choice buying and selling in an easy and simple- to-read presentation that would be necessary for investors of all sizes and talent levels.”

Chris Jarvis, CFA, CMT, Caprock threat administration, LLC


“Even the main skilled traders frequently fail to remember the truth that innovations on futures are essentially various from techniques on shares. This booklet fills that hole and units the list instantly with transparent and concise descriptions which are effortless to appreciate. absolute to develop into a real resource of worth construction for somebody drawn to buying and selling commodity options.”

Jeff Augen, writer, The Volatility area in strategies Trading


Commodity ideas arms readers with the suggestions and strategies had to take a extra lively method of dealing with possibility in today’s turbulent markets. The authors exhaustively holiday down each element of a commodity choice to its lowest universal denominator, making this ebook a necessary piece of knowledge for these trying to extend their buying and selling device field or extra construct on current alternative strategies.”

John Netto, leader funding Strategist, NetBlack Capital and writer, One Shot—One Kill Trading


Investors around the world are researching the big possibilities on hand via commodity innovations buying and selling. even though, simply because commodities have differing underlying features from equities, commodity ­options behave otherwise besides. during this booklet, of the field’s most beneficial analysts current thoughts equipped from the floor up for commodity suggestions. Carley Garner and Paul Brittain commence with a short primer on how commodity innovations paintings, how they advanced, and why traditional techniques options frequently fail within the commodity strategies markets. subsequent, utilizing special examples in line with their very own huge study, they express how one can leverage the original features of commodity ideas on your personal trades. You’ll stroll via trades from “top to bottom,” grasp either lengthy- and short-option ways, and study robust techniques often missed in innovations books. for instance, the authors introduce man made swing buying and selling ideas that systematically decrease volatility from the marketplace.


This book’s easy-to-use buying and selling suggestions are strategically hired by way of the author’s consumers on a daily basis: With Commodity Options, you could paintings to place the percentages on your desire, too!


• Why commodity concepts are different–and what it ability to you
Understand key transformations within the underlying resources and the logistics of industry execution

• Systematically rewrite the chances on your favor
Four how one can make successful trades extra likely–and wasting trades much less common

• while to alternate brief options–and tips to deal with the danger
Why cautious choice promoting could increase your odds of good fortune

• grasp recommendations designed for various industry conditions
Combine lengthy and brief ideas to create the suitable technique for any marketplace opportunity

• make the most short-lived tendencies via “synthetic” swing trading
Get some great benefits of futures contracts with out the volatility

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Extra info for Commodity Options: Trading and Hedging Volatility in the World's Most Lucrative Market

Sample text

Consequently, traders bid the price of an option on a futures contract with the knowledge that the underlying is leveraged. Thus, an option on a futures contract with similar positioning and circumstances as an option on a stock will likely be comparatively more expensive. Note that this is based on our personal familiarity and interpretation and would be difficult to prove mathematically. This is because we are, in essence, trying to compare apples to oranges. In fact, many out there may not agree with our conclusions, but you are free to form your own opinion.

As you work your way through this book, you will become more comfortable with the pricing structure. In the case of most commodity options or futures contracts, you simply multiply each tick by the assigned point value to determine the actual dollar amount of each contract, or more important the profit or loss on a given trade. To demonstrate, the multiplier in cotton is $5. 50 you would be profitable by $250 ($5 x 50). Perhaps one of the most commonly traded complexes for traders migrating from stock options to options on futures is the grains.

By osmosis, equity options tend to lure more participants than options on futures. Some option markets that we have found not to be liquid enough to effectively trade are lumber, pork bellies, rice, oats, and From the Library of Melissa Wong 2 An Option Is an Option Is an Option…Think Again 25 copper. There are many others, but these are among the illiquid option markets that tend to attract the most interest. While option market liquidity can be determined by looking at the daily volume and open interest statistics, this information may not be enough.

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