One of the most common things you’ll hear a futures trader say is, “Make sure you lock in profits with stops!” One thing some traders don’t realize is that you can lock in profits with options as opposed to using just a stop loss order. This article will focus on how locking in profits is… Read more.
Strategies
Using Covered Calls and Puts to Gain Trade Management Flexibility
A covered call/put is an option strategy used by traders who hold a long/short futures position and sell a call/put option on the same underlying futures.
Bear Put Spreads: An Alternative to Purchasing Puts
Options are a great way to get involved with the futures markets. One of the most popular ways to trade with options is to buy puts.
Bull Call Spreads: An Alternative to Purchasing Calls
Options are a great way to get involved with the futures markets. One of the most popular ways to trade with options is to buy calls.
Hedging by Purchasing Options: A Margin Free Way of Risk Management
Talk with any hedger and they’re sure to tell you about an experience with trading on margin. Margin is a good faith deposit that a hedger must have in their account in order to initiate a long or short futures position. For example, the margin on a corn contract is currently $2,362.00. This means that… Read more.
5 Tips for the Option Buyer
Tip 1: Have an exit plan. It seems very elementary, but some traders will spend numerous hours looking for opportunities to enter a market, but put no thought into how and when they are going to exit. Whether you base your trading decisions technically or fundamentally, you will need to know when you are going… Read more.
Going Greek: Understanding your Option’s Delta
Option traders are often speaking another language. I want to help you understand how your option’s value is going to be affected by changes in the market. We can calculate how our option is going to react to these changes by understanding the Option Greeks. The Black-Scholes Model identifies 5 Option Greeks to help us… Read more.
Hedging with Commodity Futures: It’s All About Managing Price Risk!
The goal of hedging is to transfer price risk from one party to another. Hedging has been used for hundreds of years to help producers and buyers protect themselves from price risk.
The Wonderful World of Futures Spread Trading
When it comes to Futures Spreads, many traders ask us what is the benefit of spreading futures contracts. They want to know why we often choose to spread futures contracts instead of either being long or short a single futures contract or option, or use option spreads instead.
Hedging Systematic Risk
This post originally appeared in FutureSource’s Fast Break Newsletter on March 10, 2010, where Craig Turner is a regular contributor on various futures trading topics. Systematic risk is always a threat to even a well-diversified portfolio. When it comes to trading, we are always aware of systematic risk, and look for ways to hedge it… Read more.
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