• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Daniels Trading

Independent. Objective. Reliable.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Careers
    • Risk Disclosure
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • DanielsAg Mobile App
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Hedging Videos
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Capture the Move
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • AccuMarkets
      • The Cullen Outlook
      • Data Feed Trade
      • Rath Overlay
      • Seasonal Spread Trader
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • The Swine Times
      • Technical Ag Knowledge
      • This Week in Grain
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Market Action Scanner
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • PatternCast
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
    • Webinars
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • GAIN Capital Futures
    • R.J. O’Brien
  • Contact
Home / Education / Futures & Options Strategy Guide / Long Risk Reversal

Long Risk Reversal

Overview

Pattern evolution:

Long Risk Reversal

When to use: When you are bullish on the market and uncertain about volatility. Normally this position is initiated as a follow-up to another strategy. Its risk/reward is the same as a LONG FUTURES except that there is a flat area of little or no gain/loss.

Profit characteristics:
Profit increases as market rises above the long call strike price. Profit at expiration is open-ended and is based on the exercise price of B +/– price received or paid to initiate position.

Loss characteristics: Loss increases as market falls below the short put. Loss at expiration is open-ended and is based on the exercise price of A +/– premium received or paid to initiate position.

Decay characteristics: Time decay characteristics vary according to the relationship of the call strike price, put strike price and the underlying futures price at the time the position is established. The position is time decay neutral (not affected) if the futures price is exactly mid-way between the call and put strike prices; long time decay (benefits from time decay) when the futures price is closer to the call than the put strike price and short time decay (time decay erodes the value of the position) when the futures price is closer to the put than the call strike price.

CATEGORY: Directional
Long call B, short put A

Additional Futures & Options Strategies

  • How to Use This Guide
  • Long Futures
  • Long Synthetic Futures
  • Short Synthetic Futures
  • Short Risk Reversal
  • Long Call
  • Short Call
  • Long Put
  • Short Put
  • Bull Spread
  • Bear Spread
  • Long Butterfly
  • Short Butterfly
  • Long Iron Butterfly
  • Short Iron Butterfly
  • Long Straddle
  • Short Straddle
  • Long Strangle
  • Short Strangle
  • Ratio Call Spread
  • Ratio Put Spread
  • Ratio Call Backspread
  • Ratio Put Backspread
  • Box or Conversion

Contents Courtesy of CME Group.

Primary Sidebar

Tips & Strategies

5 Ways A Futures Trading Simulator Can Improve Performance

5 Ways A Futures Trading Simulator Can Improve Performance

Spending some time on a futures trading simulator is a great, risk-free way to gain market-related experience. Let’s take a look at five key benefits that a simulator can offer to help improve your trading skills.

Successful Trading: The Importance of a Solid Foundation

In order to be successful, you must first correctly identify the nature of the challenge, and then from that reality, intentionally build a foundation to support you for that challenge.

How Optimizing Your Futures Market Hours Promotes Success

How Optimizing Your Futures Market Hours Promotes Success

For most people who are gainfully employed, longer hours typically equate to greater financial rewards. Whether the motivation is to receive overtime pay or to earn a promotion, dedication in the workplace is a precursor to financial success. However, for active futures traders, this approach isn’t always effective. Although putting adequate time into the markets… Read more.

More Tips & Strategies

  • 4 Characteristics Of Powerful Futures Trading Charts
  • 3 Benefits Of Futures Spread Trading
  • 3 Advantages To E-Mini Trading
  • Understanding Expiration And Futures Contracts Months
  • 5 Key Benefits Of Futures Trading In The Digital Age
  • How To Optimize Your Commodity Trading Platform
Trustpilot

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

Daniels Trading
100 South Wacker Drive, Suite 1225
Chicago, IL 60606
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot

Copyright © 2019 · Daniels Trading. All rights reserved.

Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

  • Risk Disclosure
  • Privacy Policy
  • Terms of Use
  • Back to top