Trading Commodity Options with Creativity: How to use the market’s money to finance speculations.
Options are priced to lose. Thus, habitually buying options require impeccable timing and a little luck to succeed. However, traders might benefit from the use of option spread strategies aimed at using the market’s money to purchase long calls and puts. In short, speculative option purchases can be financed by the sale of an eroding asset. Of course, this approach isn’t without its disadvantages and opportunity costs but in the right circumstances, there are low and limited risk ventures with potentially attractive payouts. Come find out how to creatively use calls and puts ad building blocks to create strategies with various risk and reward prospects. Highlights include:
• A crash course in option mechanics.
• An unconventional but logical approach to option trading.
• How to create custom delta positions with long and short call and puts.
• FREE option trades built for leverage and profit potential.
• Debit option spreads aimed at keeping risk low and limited.
• Trading examples.
Trading gold futures and options on futures
Carley discusses various options and futures strategies using gold as a portfolio diversifier. Gold, unlike other physical assets, has very little industrial or practical purposes but it can be an effective way to hedge a traditional portfolio. Yet, using inefficient products such as ETFs could expose traders to unexpected risks and drawbacks. The futures and options markets, on the other hand, offer highly efficient access to gold price exposure fitting the needs and risk tolerance of any sized investor or speculator.
- Why consider gold for hedging or speculating?
- Various gold futures sizes and exchanges.
- Gold futures vs ETFs.
- What moves the gold market?
- Analyzing and understanding gold seasonal tendencies.
- Mining for clues in the COT Report.
- Technical analysis and gold futures.
- The time and place for gold is not “always”.
- Hedges or diversifiers are only helpful if profits are locked in.
Trading Commodity Options ...with Creativity, an options on futures trading book by Carley Garner.
Trading Commodity Options…with Creativity takes readers on an unfamiliar voyage destined to simplify the options on futures markets and arm market participants with the knowledge to employ smarter commodity market strategies.
Many books have been written on options trading, but most focus on the academic side of options suggesting there are black and white answers and reliable mathematical formulas to determine profit and loss. Yet, options traders must be ready and willing to deal in gray areas, approximations, and guesswork. Trading Commodity Options…with Creativity bridges the gap between traditional options trading literature and real-life trading examples. Through tough-learned lessons, this book tackles the nearly impossible task of streamlining the process of developing an appropriate options strategy for any market environment and risk tolerance, then making the necessary mid-trade adjustments to improve the odds of success.
Carley Garner is a frequent contributor of commodity market analysis to CNBC’s Mad Money TV show hosted by Jim Cramer. She is also a regular guest on the Options Insight segment on Bloomberg Television with Abigail Doolittle. Garner has been a futures and options broker, where for over nearly two decades she has had a front-row seat to the trials, tribulations, and victories traders have been dealt by the commodity markets.
Trading Commodity Options…with Creativity is Garner’s fifth title. She is a best-selling author and has been praised for her knack of portraying complicated subject matter in an easy-to-read and entertaining format. Readers will undoubtedly walk away with the tools needed to utilize options, tame the treacherous commodity markets, and create custom-risk and reward profiles to meet the needs of traders regardless of size and experience.
Learn how to pay for vertical spreads using an option ladder strategy.
Options on futures are expensive, learn to sell premium to pay for long option (directional) plays.
Options are priced to lose, so it generally makes sense to avoid paying up too much for an option, or an option strategy such as a vertical spread. Yet, selling naked options to help finance long option places can get hairy if market volatility explodes. Some traders opt for ratio spreads which can generally give traders the ability to profit in most market scenarios but wreaks havoc on a trading account if the directional play is "too right". Perhaps one way to combat the disadvantage of trading ratio spreads while maintaining most of the benefits is an option ladder. This is basically the practice of staggering the short option strike prices of a ratio spread. Another way to look at is, is the sale of an additional option with a distant strike to cover the cost of a vertical debit spread. For instance, a trader could buy a near-the-money call option, sell an out-of-the-money call option, then sell a further out-of-the-money call option. Depending on how the trade is structured, this could result in a "free" trade, a cheap trade, or even a small credit. Join us to discuss the risks and rewards as well as the advantages and disadvantages of trading option ladder spreads.
• Options are priced to lose, making a long option only strategy flawed without perfect timing and price prediction.
• Selling options to finance long option trades can be beneficial if the trade is structured correctly in regard to risk and reward.
• Understand the peril of traditional ratio spread trading.
• Modifying ratio spreads to create a ladder strategy with less relative risk.
• Create close-to-the-money options on futures strategies without spending a fortune in option premium.
Learn How to Day Trade and Swing Trade with Limited Risk & Without Premature Stop Outs
The CME Group offers a suite of weekly options in markets ranging from stock indices, crude oil, gold, and grains. Short-term traders can utilize these products to create directional trading opportunities in which the trader maintains lasting power with a moderate amount of capital and even less risk. For instance, a trader wanting to gain bullish exposure in the S&P 500, crude oil, or even gold for the next trading session could buy a call option expiring in two days for little out of pocket expense, no risk of being stopped out before the market makes the desired move, minimal stress, and defined risk. Come learn more about how these products have the potential to increase the odds of success.
Learn to trade Micro E-mini stock index futures
While there are a plethora of advantages to trading futures contracts relative to stock market ETFs such as favorable tax treatment, easier tax reporting, around the clock market access, ease of shorting the market, and trading on margin without the burden of paying interest charges to a brokerage house. There is one large bright pink elephant in the room; leverage and the associated risk (large swings in position profit and loss).
The Chicago Mercantile Exchange Group (CME) has recognized the need for a stepping stone for those interested in the convenience of futures trading but not interested in the big risks that come with it. Accordingly, the CME is launching a suite of Micro E-mini futures contracts for the S&P 500, NASDAQ 100, Dow, and Russell 2000. Each of these products will be 1/10th the size of the traditional E-mini bringing the futures markets to retail traders of all sizes, types, and risk tolerances.
Find out how these smaller products might be candidates for swing trading, position trading, and even scale trading.
The grain futures markets and the stock market are behaving differently to Chinese trade deal news.
Stock market investors and those speculating and in agricultural commodity futures such as corn, soybeans and wheat are viewing the status of the US and China trade spat differently. They can't both be right, but there is a chance they are both somewhat wrong. *THERE IS A SUBSTANTIAL RISK OF LOSS IN TRADING FUTURES AND OPTIONS.
Glen Larson of TradeNavigator and Carley Garner discuss futures market psychology.
Speculating in the financial and commodity markets is easy, but trading futures and option isn't. Garner and Larson discuss the difference between making money and being right, as well as offer some tips and tricks to managing trading emotions via creative risk management techniques.*THERE IS A SUBSTANTIAL RISK OF LOSS IN TRADING FUTURES AND OPTIONS.
The Only Magic in Commodity Trading: Humility (Trading Psychology and Emotional Management)
There is a big difference between being right and making money. Trading success isn't necessarily determined by strategy, entry and exit points, or time frames; the true line in the sand drawn between winners and losers is determined by the ability to manage trading emotions. There are steps that can be taken to mitigate the impact of emotion on a trading plan; including the purchase of cheap weekly options to act as a backstop against runaway day trades and approaching the market with realistic expectations. Join Carley Garner, an experienced futures and options broker with DeCarley Trading, to discuss creative ways to mitigate tail risk in day trading using options, and in turn improve emotional stability in trading. Talking points will include:
Steps to keeping a clear mind and proper psychological preparation for trading.
Buying cheap insurance policies against trades on awry.
Examples of panic-driven trading and tips to avoid being a victim.
The most important quality of a successful trader.
Peter Davies of Jigsaw Trading: 2 weeks to better trading
Peter Davies, of Jigsaw Trading, will walk participants through a 2-week process aimed at improving their edge in the market.
Topics covered will include:
Analyzing yourself - Experience, outlook, goals, and commitment level
The nature of an edge in the futures market
What traders need to bring to the table
Detailed 2-week plan to improve futures market speculation
Obstacles that can throw traders off track
Analyzing the result of the 2-week plan and formulating a forward-looking trading plan
Peter will also discuss the results of the people that have been through the process. What did they discover about themselves and the futures markets?
Trading Option Spreads in the Zaner360 Futures and Options Platform
Learn how option spread trading can benefit commodity traders due to flexible risk and reward profiles. Carley Garner, an experienced futures broker at DeCarley Trading, discusses how to trade and place vertical option spreads, ratio spreads, risk reversals and more.
Trade futures contracts like you would stocks, w/income and limited risk
Creative use of long and short commodity options traded against a long or short futures contract can create a position that mimics the primary advantage of stock trading; limited risk and income generation.
Join us to discuss the peril of trading futures contracts outright and a strategy to modify the practice of futures trading to resemble something more comfortable and familiar; stock trading. Experienced futures broker, Carley Garner, will outline an effective method of reducing the stress and risk of participating in the futures markets. Specifically, this class will focus on constructing covered call strategies in the commodity markets with the benefit of a catastrophic insurance policy in the form of a long put option. The result is a position that generates income to cushion downside risk and enable the trader to benefit from a sideways market while also providing attractive profit potential and a sharp hedge against tail risk.