Commodity options trading games

10 great board games for traders. Games are great when they bringing people together to socialize, but they can be even better if you&rsquore getting something out of them. Here&rsquos a chance to sit back with some friends and put your skills as a trader to the test in a (slightly) less competitive atmosphere. Although nearly everyone owns a copy of Monopoly, we think you'll agree once you&rsquove seen our selections that games have come a long way since it was released in the 1930s. Here are 10 board games traders are sure to love. After you&rsquove check out our selections, let us know if you&rsquove played any of these, or if there&rsquos a gem that we missed. Commodity options trading games On-line Commodity Trading Simulation. Begin our short account application here. See how we can help you? Learn about the basics of commodity trading. Watch as these traders share their method with you. Ask questions or see if how your trading method compares. TRADING COMMODITIES, STOCKS ANDOR COMMODITY OR STOCK OPTIONS INVOLVES RISK.

MONEY CAN BE LOST ANDOR MADE TRADING ANY SECURITY ANDOR OPTION. PAST PERFORMANCE OF A TRADING SYSTEM OR MARKET IS NOT NECESSARILY INDICATIVE OF THE FUTURE PERFORMANCE OF THAT SAME SYSTEM OR MARKET. MOCK TRADING AND ITS HYPOTHETICAL PERFORMANCE RESULTS ARE INHERENTLY LIMITED AND SHOULD ONLY BE USED AS A LEARNING TOOL AND NOT A MEASURE OF FUTURE PERFORMANCE. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED WITHIN THIS SITE, SUPPORT AND TEXTS. OUR COURSES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN. 3 Ways Commodity Options Trading Differs from Stock Options. I'm a huge fan of trading commodity options. And you should be, too. But there are some nuances when trading commodity options that you have to consider if you're going to move some capital away from equities. These 3 differences are the most important concepts to understand, as they can potentially change the way you trade these instruments.

Fear is In Both Directions. If there is one thing to learn about options is that each contract will have a different implied volatility. You can visualize implied volatility over various strikes by looking at the volatility skew. Below is a picture from LiveVol showing the volatility skew for SPY June Options: Notice that as we go lower in strike, the implied volatility on each contract rises. This is because option traders are willing to pay up for "tail-risk" protection, and most hedgers in equities are fearful of downside. Compare that with the volatility skew for GLD June Options: Instead of a "skew" we now have a "smile." What is going on here? It comes down to the perception of risk . Equity investors are fearful of downside in equities. But in commodities like gold, oil, soybeans, and currencies the perception of risk is bi-directional. That means the tail risk can be on either side. Think about oil-- if we saw a $20 move in oil to the upside in a very short amount of time, that would have significant consequences across various assets. So when hedgers and speculators come out to commodity options, they fear strong moves in either direction. This changes the method set used in commodity options trading-- iron condors become more attractive, as do ratio sales after extreme moves.

Commodities Have Different Event Based Risk. Single stock equities can be driven by upgrades, downgrades, earnings, FDA events, insider selling, holding updates, institutional rebalancing, intermarket correlation, same store sales. the list can keep going. This heightened risk produces higher potential reward-- and for those that want to get more conservative, trading indexes or index futures can mitigate that risk. With commodity options, the risks that drive movement are quite different than what drives equities. It could be based off supply reports or interest rate changes by central banks. Because the risks are different, it can give you a way to diversify your trades against different risks. This can be crucial when finding the best trades. Commodity Option Traders Are a Different Breed. Remember, it comes down to the perception of risk.

Why is risk bi-directional? Because the motivations in the commodities market are completely different than stocks. Joe farmer needs to sell his soybeans. Spacely Sprocket company needs to hedge their Euro risk. ZeroHedge has to buy more silver to combat the manipulators. Contrast that with stocks-- for 95% of the population, investing is the key term. They look to buy stock in companies. Contrast that to gold and oil: there's no cash flow from these. From a structural standpoint, they aren't "investments." Because the needs of these markets are different, the demands of these markets are different. What's going on right now.

I see two possibilities heading into the summer months . Either event-based risk (EurozoneChina) makes a comeback or it doesn't. If we get the first scenario, then correlations will ratchet up among stocks and it will be a macro game again. If the second comes along, then summer volatility and liquidity in equities will dwindle. Either way, commodity options trading is definitly coming back into my trading arsenal for the next few months. Free Training This Thursday. Having trouble earning option income profits in this market rally? I've put together a Free Training for those of you who want to earn Simple Income Trading Profits in a Market Rally. Commodity options trading games Commodity Trading game for iOS. Merc – commodity trading game has been updated to 1.4. • You can finally enjoy the Margin Call game option, which change the gameplay dramatically • A number of bugs has been fixed • Spanish and German localisations added. Game has already attracted attention of several media sources, including. At last – MERC is available in US and UK on the App Store.

If you still didn’t make up your mind about downloading the game, we encourage you to check the gameplay: We worked hard and now it’s time to Play hard. MERC is in the air. Get it from the AppStore for FREE now! MERC game is launched but we still enjoy this cinematic trailer. Tired of trading stocks? Well, we are! MERC is the First Commodity Trading game for iOS. A sequel to last year released stock trading game Trader’s Way. And this is how it’s different: 1) Obviously new trading items – instead of stocks now we have Gold, Oil, Coffee and Corn, and even more to come! 2) Different game mechanics. 3) New look and sound.

4) Different game modes. 5) Long awaited Online Gaming. But some things are just meant to stay the same – You as a player will need to succeed. in outsmarting your competitors by building your own strategies and trying to get rich. by manipulating commodity market. Follow us on twitter for frequent updates @MERC_for_iOS. commodity+options+trading. Narrow Your Search. Tech Industry (113) Tech Culture (54) Internet (45) Computers (28) Mobile (24) Security (9) Phones (8) Software (8) Applications (5) Audio (4) Gadgets (4) Sci-Tech (4) Smart Home (4) Auto Tech (3) Desktops (3) Online shoppers are liking those speedy checkout options. Manuel BlondeauCorbis via Getty Images Apple Pay so far hasn't inspired people to burn their wallets, but there's one type of newer digital payment that's gaining traction. Visa on Thursday. By Ben Fox Rubin 06 April 2017. iPhone 7 storage options: Why 32GB is likely not enough.

1:49 Close Drag Autoplay: ON Autoplay: OFF Last September, Apple finally did away with the abysmal, 16GB model in its iPhone lineup. Starting with the iPhone 7, you have the option of 32GB, 128GB. By Jason Cipriani 23 March 2017. Apple's iPhone 7 and 7 Plus cases add fetching new color options. Enlarge Image Apple The iPhone wasn't the only Apple product that got a color update today. Along with the new red iPhone 7 and iPhone 7 Plus, Apple added new colors to its line of silicone and. By David Carnoy 21 March 2017. Accused hackers make millions off insider trading info. James MartinCNET The US district attorney charged three Chinese citizens for hacking two law firms and making more than $4 million from the information they allegedly stole. The three men. By Alfred Ng 28 December 2016. Walmart checking out more digital payment options. Francis Joseph DeanCorbis via Getty Images Walmart appears to be diving deeper into digital payments.

Last week, the retailer unveiled a partnership with JPMorgan Chase to bring the bank's. By Ben Fox Rubin 08 November 2016. Mini NES is gone? Here are some Nintendo backup options. Bad news: The Mini NES is impossible to find. This year's hot retro gaming gift might be a pretty tough thing to track down outside of getting ripped off on eBay. If you can't get your hands on a. By Scott Stein 11 November 2016. Catch this gold Pikachu Pokemon trading card for $2,000. Enlarge Image The Pokemon Company While the Pokemon Trading Card Game may have been put aside for more modern endeavours, this 20 year celebratory card might be that one final must-have for the. By Adam Bolton 26 October 2016. One-stop shop: Google adds more ridesharing options in Google Maps. Enlarge Image Google There's more to life than Uber. Google Maps now lets you compare multiple ride options side by side, so you don't have to limit yourself when traveling somewhere you haven't. By Andrew Krok 09 September 2016. The $100,000 Pokemon trading card you can buy on eBay. Got Pokefever?

Who could blame you. The two-week old game, which launched July 6, has inspired love, exercise, external battery packs and, unfortunately, has led to real-world harm. Now it looks. By Jessica Dolcourt 22 July 2016. After 32 years, Koss finally considers color options for the Porta Pro headphones. If someone asks me for headphone buying advice and doesn't need fancy stuff like active noise canceling or a wireless connection, I always recommend the Koss Porta Pro. Their remarkable sound. By Justin Yu 13 July 2016. © CBS Interactive Inc. All Rights Reserved. A Brief Introduction to Commodity Option Trading.

The world of commodity options is diverse and cannot be given justice in a short article such as this. The purpose of this writing is to simply introduce the topic of options on futures. Should you want to learn commodity options trading strategies in more detail, please consider purchasing "Commodity Options" published by FT Press at CommodityOptionstheBook. com. Why Trade Commodity Options? Just as there are several ways to skin a cat, there are an unlimited number of option trading strategies available in the futures markets. The method that you choose should be based on your personality, risk capital and risk aversion. Plainly, if you don't have an aggressive personality and a high tolerance for pain, you probably shouldn't be employing a futures and options trading method that involves elevated risks. Doing so will often results in panic liquidation of trades at inopportune times as well as other unsound emotional decisions. Commodity options provide a flexible and effective way to trade in the futures markets.

Further, options on futures offer investors the ability to capitalize on leverage while still giving them the ability to manage risk. For example, through the combination of long and short call and put options in the commodity markets, an investor can design a trading method that fits their needs and expectations such an arrangement is referred to as an option spread. Keep in mind that the possibilities are endless and will ultimately be determined by a trader's objectives, time horizon, market sentiment, and risk tolerance. What is a Commodity Option? There are two types of commodity options, a call option and a put option. Understanding what each of these is and how they work will help you determine when and how to use them. The buyer of a commodity option pays a premium (payment) to the seller of the option for the right, not the obligation, to take delivery of the underlying commodity futures contract (exercise). This financial value is treated as an asset, although eroding, to the option buyer and a liability to the seller. There are two sides to every option trade, a buyer and a seller. Each of these sides experiences the opposite outcome if the option buyer is making money the option seller is losing money in the identical increment, and vice versa. Traders that are willing to accept considerable amounts of risk with the prospects of limited reward, can write (or sell) options, collecting the premium and taking advantage of the well-known belief that more options than not expire worthless.

The premium collected by a commodity option seller is seen as a liability until the option is either offset (by buying it back), or it expires. This is because as long as the option position is open (the trader is short the commodity option), there is substantial risk exposure. Should the futures price trade beyond the strike price of the option, the risk is similar to holding a commodity futures contract outright. On the other hand, commodity option buyers are exposed to limited risk and unlimited profit potential, but they also face dismal odds of success on each individual speculation. For this reason, we often refer to the practice of buying options in the commodity markets as the purchase of a lottery ticket. It probably won&rsquot pay off but if it does the potential gain is considerable. Conversely to the commodity option seller, an option buyer views the position as an asset (not a liability) until it is sold or expires. This is because any long option held in a commodity trading account has the potential to provide a return to the trader, even if that potential is small. &bull Call Options &ndash Give the buyer the right, but not the obligation, to buy the underlying at the stated strike price within a specific period of time. Conversely, the seller of a call option is obligated to deliver a long position in the underlying futures contract from the strike price should the buyer opt to exercise the option.

Essentially, this means that the seller would be forced to take a short position in the market upon expiration. &bull Put Options &ndash Give the buyer the right, but not the obligation, to sell the underlying at the stated strike price within a specific period of time. The seller of a put option is obligated to deliver a short position from the strike price (accept a long futures position) in the case that the buyer chooses to exercise the option. Keep in mind that delivering a short futures contract simply means being long from the strike price. When to use Commodity Options? Options on futures spreads, or even outright short calls and puts, can be useful in any commodity market environment. However, we believe that the best option trading opportunities present themselves during times of extreme prices. In our opinion, commodity markets coming off of long-term highs or lows typically present traders with an extraordinary prospect. However, it is important to realize that just because a commodity seems "cheap" doesn't mean that it can't go lower. Likewise, while we would never advocate buying (or being bullish with options) a commodity at an all time high, it is always possible that prices can continue higher but generally speaking options in such an environment are over-priced. As a result, they come with magnificently low odds of success.

Whereas price extremes have no boundaries, they don't last forever, eventually commodity market supply and demand factors will bring prices back to a more equilibrium state. Accordingly, while caution is warranted at extreme levels it is often a good time to be constructing counter trend trades as it could be one of the most advantageous times in history to be involved in a market. For instance, similar to the idea of call options being over-priced when a market is at an extreme high, the puts might be abnormally cheap. Once again, your personal situation would determine whether an unlimited risk or limited risk option method should be utilized. Please realize that identifying extreme pricing scenarios is easy, it is much more difficult to predict the timing necessary to convert it into a profitable venture. In search of a promising commodity option trade, it is important to look at whether or not the options are priced fairly. Option prices fluctuate according to supply and demand in the underlying commodity market. At times, options on futures prices become inflated or undervalued relative to theoretical models such as Black and Scholes. For example, during the "crash" of 2008 the value of put options exploded as traders scrambled to buy insurance for their stock portfolios or simply wanted to wager that the equity market would go down forever. The increase in option premium was partly due to inflated volatility but increased demand for the instruments had a lot to do with it. Those that chose to purchase put options at inopportune times and at overvalued prices, likely didn't fair very well. To reiterate, buying options in times of low volatility could prove to be advantageous should the volatility increase sharply.

On the other hand, a lack of deviation in the price of the underlying asset will produce lower market volatility and even cheaper option premiums. Once again, pricing is relative and dynamic "cheap" doesn't mean that it can't get "cheaper". Open your Mind to Option Selling in Commodities. It has been suggested by several conducted studies, including one by the Chicago Mercantile Exchange, that far more options than not expire worthless. Using this assumption, we believe that in many circumstances it may be advantageous to be a net option seller in the. For instance, it is possible to construct an option method in the futures markets that is affordable without sacrificing the odds of success. but with the convenience comes theoretically unlimited risk. This is easier than it sounds, similar to the way you would borrow money to pay for a house or a car, you can borrow money from the exchange to pay for long commodity option trades. There are an unlimited number of combinations of self-financed trades but they are typically going to involve more short options than long options, or at least as much premium collected on the sold options than that paid for the longs. In essence, the money brought in through the sale of the short options goes to pay for the futures options that are purchased. The result is a relatively close-to-the-money option with little out of pocket expense but theoretically unlimited risk beyond the strike price of the naked short options. The Bottom Line on Futures on Options Trading. Follow Carley Garner on Twitter. Commodity Futures and Options Site Tags.

NOTE: There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data contained on DeCarleyTrading. com was obtained from sources considered reliable. Their accuracy or completeness is not guaranteed. Information provided on this website is not to be deemed as an offer or solicitation with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed on DeCarleyTrading. com will be the full responsibility of the person authorizing such transaction. Contact Carley Garner, Commodity Broker. I'm always open for a quick chat with prospective brokerage customers! Give me a call or send an email or instant message any time and I will respond shortly. commodity+options+trading. Narrow Your Search. Tech Industry (113) Tech Culture (54) Internet (45) Computers (28) Mobile (24) Security (9) Phones (8) Software (8) Applications (5) Audio (4) Gadgets (4) Sci-Tech (4) Smart Home (4) Auto Tech (3) Desktops (3) Online shoppers are liking those speedy checkout options.

Manuel BlondeauCorbis via Getty Images Apple Pay so far hasn't inspired people to burn their wallets, but there's one type of newer digital payment that's gaining traction. Visa on Thursday. By Ben Fox Rubin 06 April 2017. iPhone 7 storage options: Why 32GB is likely not enough. 1:49 Close Drag Autoplay: ON Autoplay: OFF Last September, Apple finally did away with the abysmal, 16GB model in its iPhone lineup. Starting with the iPhone 7, you have the option of 32GB, 128GB. By Jason Cipriani 23 March 2017. Apple's iPhone 7 and 7 Plus cases add fetching new color options. Enlarge Image Apple The iPhone wasn't the only Apple product that got a color update today. Along with the new red iPhone 7 and iPhone 7 Plus, Apple added new colors to its line of silicone and.

By David Carnoy 21 March 2017. Accused hackers make millions off insider trading info. James MartinCNET The US district attorney charged three Chinese citizens for hacking two law firms and making more than $4 million from the information they allegedly stole. The three men. By Alfred Ng 28 December 2016. Walmart checking out more digital payment options. Francis Joseph DeanCorbis via Getty Images Walmart appears to be diving deeper into digital payments. Last week, the retailer unveiled a partnership with JPMorgan Chase to bring the bank's. By Ben Fox Rubin 08 November 2016. Mini NES is gone? Here are some Nintendo backup options.

Bad news: The Mini NES is impossible to find. This year's hot retro gaming gift might be a pretty tough thing to track down outside of getting ripped off on eBay. If you can't get your hands on a. By Scott Stein 11 November 2016. Catch this gold Pikachu Pokemon trading card for $2,000. Enlarge Image The Pokemon Company While the Pokemon Trading Card Game may have been put aside for more modern endeavours, this 20 year celebratory card might be that one final must-have for the. By Adam Bolton 26 October 2016. One-stop shop: Google adds more ridesharing options in Google Maps. Enlarge Image Google There's more to life than Uber. Google Maps now lets you compare multiple ride options side by side, so you don't have to limit yourself when traveling somewhere you haven't. By Andrew Krok 09 September 2016. The $100,000 Pokemon trading card you can buy on eBay. Got Pokefever?

Who could blame you. The two-week old game, which launched July 6, has inspired love, exercise, external battery packs and, unfortunately, has led to real-world harm. Now it looks. By Jessica Dolcourt 22 July 2016. After 32 years, Koss finally considers color options for the Porta Pro headphones. If someone asks me for headphone buying advice and doesn't need fancy stuff like active noise canceling or a wireless connection, I always recommend the Koss Porta Pro. Their remarkable sound. By Justin Yu 13 July 2016. © CBS Interactive Inc. All Rights Reserved. 5 advantages of commodity vs. equity options. Based on experience with new commodity traders, we’ve found about 80% of them have a history with stock options. Most of these traders, when pressed, express a vague desire to diversify as one of their chief reasons for taking the next step to commodities.

However, it’s intriguing that few have a firm grasp of the real advantages that commodity options can offer — especially if they are accustomed to the constraints that stock option selling can place on an investor. Don’t misunderstand: Selling equity options can be a lucrative method in the right hands. However, if you are one of the tens of thousands of investors who sell equity options to enhance your stock portfolio performance, you may be surprised to discover the horsepower you can get by harnessing this same method in commodities. In an era when sudden and excessive volatility is common, diversification is more important than ever. But the advantages don’t end there. Selling (also known as writing) options can offer benefits to investors in both equities and commodities. However, there are substantial differences between writing stock options and writing options on futures. What it generally boils down to is leverage. Futures options offer more leverage and, therefore, can deliver greater potential rewards (in addition to greater risk). In selling equity options, you do not have to guess short-term market direction to profit. The same remains true in futures, with a few key differences: Lower margin requirement (that is, a higher return on investment).

This is a key factor that attracts many stock option traders to futures. Margins posted to hold short stock options can be 10 to 20 times the premium collected for the option. With the futures industry’s margin calculation system, however, options can be sold with out-of-pocket margin requirements for as little as one to one-and-a-half times premium collected. For instance, you might sell an option for $600 and post a margin of only $700 (total margin requirement minus premium collected). This can translate into substantially higher return on your working capital. Attractive premiums can be collected for deep out-of-the-money strikes. Unlike equities — where to collect any worthwhile premium, options must be sold one to three strike prices out of the money — futures options often can be sold at strike prices far out of the money. At such distant levels, short-term market moves typically will not have a big impact on your option’s value therefore, time value erosion may be allowed to work less impeded by short-term volatility. Liquidity. Many equity option traders complain of poor liquidity hampering efforts to enter or exit positions. While some futures contracts have higher open interest than others, most of the major contracts, such as financials, sugar, grains, gold, natural gas and crude oil, have substantial volume and open interest, offering several thousand open contracts per strike price.

Diversification. In the current state of financial markets, many investors are seeking precious diversification away from equities. By expanding into commodity options, you not only gain an investment that is not correlated to equities, option positions also can be uncorrelated to each other. In stocks, most individual stocks, and their options, will move at the mercy of the index as a whole. If Microsoft is falling, chances are your Exxon and Coca Cola holdings are falling as well. In commodities, the price of natural gas has little to do with the price of wheat or silver. This can be a major benefit in diluting risk. Fundamental bias. When selling a stock option, the price of that stock is dependent on many factors, not the least of which are corporate earnings, comments by the CEO or board members, legal actions, regulatory decisions or broader market direction. Soybeans, however, can’t cook their books, and copper can’t be declared too big to fail. The supplydemand picture of commodities is analytically cleaner. Knowing the fundamentals of a commodity, such as crop sizes and demand cycles, can be of great value when selling commodity options. In commodities, it is most often old-fashioned supply and demand fundamentals that ultimately dictate price, not the actions of a badly behaving CEO.

Knowing these fundamentals can give you an advantage in deciding what options to sell. A Brief Introduction to Commodity Option Trading. The world of commodity options is diverse and cannot be given justice in a short article such as this. The purpose of this writing is to simply introduce the topic of options on futures. Should you want to learn commodity options trading strategies in more detail, please consider purchasing "Commodity Options" published by FT Press at CommodityOptionstheBook. com. Why Trade Commodity Options? Just as there are several ways to skin a cat, there are an unlimited number of option trading strategies available in the futures markets. The method that you choose should be based on your personality, risk capital and risk aversion. Plainly, if you don't have an aggressive personality and a high tolerance for pain, you probably shouldn't be employing a futures and options trading method that involves elevated risks.

Doing so will often results in panic liquidation of trades at inopportune times as well as other unsound emotional decisions. Commodity options provide a flexible and effective way to trade in the futures markets. Further, options on futures offer investors the ability to capitalize on leverage while still giving them the ability to manage risk. For example, through the combination of long and short call and put options in the commodity markets, an investor can design a trading method that fits their needs and expectations such an arrangement is referred to as an option spread. Keep in mind that the possibilities are endless and will ultimately be determined by a trader's objectives, time horizon, market sentiment, and risk tolerance. What is a Commodity Option? There are two types of commodity options, a call option and a put option. Understanding what each of these is and how they work will help you determine when and how to use them. The buyer of a commodity option pays a premium (payment) to the seller of the option for the right, not the obligation, to take delivery of the underlying commodity futures contract (exercise). This financial value is treated as an asset, although eroding, to the option buyer and a liability to the seller. There are two sides to every option trade, a buyer and a seller. Each of these sides experiences the opposite outcome if the option buyer is making money the option seller is losing money in the identical increment, and vice versa. Traders that are willing to accept considerable amounts of risk with the prospects of limited reward, can write (or sell) options, collecting the premium and taking advantage of the well-known belief that more options than not expire worthless. The premium collected by a commodity option seller is seen as a liability until the option is either offset (by buying it back), or it expires.

This is because as long as the option position is open (the trader is short the commodity option), there is substantial risk exposure. Should the futures price trade beyond the strike price of the option, the risk is similar to holding a commodity futures contract outright. On the other hand, commodity option buyers are exposed to limited risk and unlimited profit potential, but they also face dismal odds of success on each individual speculation. For this reason, we often refer to the practice of buying options in the commodity markets as the purchase of a lottery ticket. It probably won&rsquot pay off but if it does the potential gain is considerable. Conversely to the commodity option seller, an option buyer views the position as an asset (not a liability) until it is sold or expires. This is because any long option held in a commodity trading account has the potential to provide a return to the trader, even if that potential is small. &bull Call Options &ndash Give the buyer the right, but not the obligation, to buy the underlying at the stated strike price within a specific period of time. Conversely, the seller of a call option is obligated to deliver a long position in the underlying futures contract from the strike price should the buyer opt to exercise the option. Essentially, this means that the seller would be forced to take a short position in the market upon expiration. &bull Put Options &ndash Give the buyer the right, but not the obligation, to sell the underlying at the stated strike price within a specific period of time. The seller of a put option is obligated to deliver a short position from the strike price (accept a long futures position) in the case that the buyer chooses to exercise the option. Keep in mind that delivering a short futures contract simply means being long from the strike price. When to use Commodity Options?

Options on futures spreads, or even outright short calls and puts, can be useful in any commodity market environment. However, we believe that the best option trading opportunities present themselves during times of extreme prices. In our opinion, commodity markets coming off of long-term highs or lows typically present traders with an extraordinary prospect. However, it is important to realize that just because a commodity seems "cheap" doesn't mean that it can't go lower. Likewise, while we would never advocate buying (or being bullish with options) a commodity at an all time high, it is always possible that prices can continue higher but generally speaking options in such an environment are over-priced. As a result, they come with magnificently low odds of success. Whereas price extremes have no boundaries, they don't last forever, eventually commodity market supply and demand factors will bring prices back to a more equilibrium state. Accordingly, while caution is warranted at extreme levels it is often a good time to be constructing counter trend trades as it could be one of the most advantageous times in history to be involved in a market. For instance, similar to the idea of call options being over-priced when a market is at an extreme high, the puts might be abnormally cheap. Once again, your personal situation would determine whether an unlimited risk or limited risk option method should be utilized. Please realize that identifying extreme pricing scenarios is easy, it is much more difficult to predict the timing necessary to convert it into a profitable venture.

In search of a promising commodity option trade, it is important to look at whether or not the options are priced fairly. Option prices fluctuate according to supply and demand in the underlying commodity market. At times, options on futures prices become inflated or undervalued relative to theoretical models such as Black and Scholes. For example, during the "crash" of 2008 the value of put options exploded as traders scrambled to buy insurance for their stock portfolios or simply wanted to wager that the equity market would go down forever. The increase in option premium was partly due to inflated volatility but increased demand for the instruments had a lot to do with it. Those that chose to purchase put options at inopportune times and at overvalued prices, likely didn't fair very well. To reiterate, buying options in times of low volatility could prove to be advantageous should the volatility increase sharply. On the other hand, a lack of deviation in the price of the underlying asset will produce lower market volatility and even cheaper option premiums. Once again, pricing is relative and dynamic "cheap" doesn't mean that it can't get "cheaper". Open your Mind to Option Selling in Commodities. It has been suggested by several conducted studies, including one by the Chicago Mercantile Exchange, that far more options than not expire worthless. Using this assumption, we believe that in many circumstances it may be advantageous to be a net option seller in the. For instance, it is possible to construct an option method in the futures markets that is affordable without sacrificing the odds of success. but with the convenience comes theoretically unlimited risk.

This is easier than it sounds, similar to the way you would borrow money to pay for a house or a car, you can borrow money from the exchange to pay for long commodity option trades. There are an unlimited number of combinations of self-financed trades but they are typically going to involve more short options than long options, or at least as much premium collected on the sold options than that paid for the longs. In essence, the money brought in through the sale of the short options goes to pay for the futures options that are purchased. The result is a relatively close-to-the-money option with little out of pocket expense but theoretically unlimited risk beyond the strike price of the naked short options. The Bottom Line on Futures on Options Trading. Follow Carley Garner on Twitter. Commodity Futures and Options Site Tags. NOTE: There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data contained on DeCarleyTrading. com was obtained from sources considered reliable. Their accuracy or completeness is not guaranteed.

Information provided on this website is not to be deemed as an offer or solicitation with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed on DeCarleyTrading. com will be the full responsibility of the person authorizing such transaction. Contact Carley Garner, Commodity Broker. I'm always open for a quick chat with prospective brokerage customers! Give me a call or send an email or instant message any time and I will respond shortly. The Best Options Trading Simulators in 2016. If you’ve been in the investing game for a little while now you may have overheard at least one person mention the term “options trading” at one point or another. That’s because many savvy investors understand the lucrative potential they possess. There's really no use in learning about options unless you take action. I recommend you First go ahead and sign up for a trading account at OptionsHouse . Then you'll actually get to make some money from all the knowledge you get from reading this article.

Before diving into the exciting and complex world of options, you might be wondering what exactly options are. The short answer is that they’re a type of security, a binding contract that allows the owner to sell an underlying asset at a certain price within a certain amount of time. They have great versatility but come with strict terms and conditions. And while there are many strategies for buying, selling, and trading options, even those with working knowledge of the market is at risk of losing serious amounts of money. Pros and Cons of Options Trading. If you’re knowledge of the market is extensive, that risk becomes less of a threat. However, just know that options trading will not make you rich overnight either. The benefit here versus stock trading is that transactions will typically require less capital. And while they may see smaller returns, they will be greater percentage-wise than returns on stocks. Another factor to consider is that their profit oftentimes is directly correlated to their contract’s premium, and the potential for loss can be large.

Leverage also means that returns can be potentially significant and the amount of money required is, on average, smaller than with stock transactions. However, options trading may not be for everyone but they are some of the most flexible choices you can make investment-wise. Potentially, they can either protect or even enhance your portfolio, depending on whether you’re the kind of investor who treds in rising, falling, or neutral markets. That’s why a serious investors will trade options using a simulator in order to sharpen their skills. By giving users an exact simulation of current market conditions, along with real-time analytics, individuals looking to learn options trading without risking money can do so with any one of these great platforms we’ve listed below. Users will hone their craft through a form of paper trading, where, upon receiving makeshift currency, they participate in virtual options trading and set up their up very own trading account. But while many options brokers create these with their very own options trading software, many can be suboptimal and downright inaccurate in terms of emulating genuine market conditions. With so many choices out there, it can be difficult finding the a well rounded simulator. That’s why I’ve taken the time in order to compile a list of what I believe to be the most useful ones. So without further ado, I present you with the best options trading simulators in 2016. We’ll start off our list with one of the best stock market simulators out there. Investopedia is a great company that can immediately get you started on options trading.

The tool allows you to instantly create your own options simulator game, albeit not the most expedited process, customize your contest, and invite whomever you like to participate. Their simulator is a great learning aid and has an intuitive user experience with a good trading feature to boot. In addition, they offer many guides to familiarize yourself with the process if you’re a beginner. To get your feet wet today, be sure to give Investopedia’s simulator a look. Another well-known institution in the world of trading is OptionsXpress. Their simulator is called Virtual Trade offers great insights that allow you to learn the basics of options trading in an all-encompassing environment. With Virtual Trader, you can put your strategies to the test under real market conditions. They offer many features such as an initial $25,000 of practice money in your paper trading account, real-time quotes and charts, over forty innovative trading tools, advanced ordering tools, and an in-depth Education Center that offers free training and how-to guides for traders of all experience levels. Pro-tip: OptionsXpress requires a large amount of personal information when signing up. Wall Street Survivor. Wall Street Survivor separates itself from the competition by giving you the choice of utilizing your option spreads within your trade method. They also offer a free setup and a mobile app so you can trade on the go. The company puts a lot of emphasis on the educational aspect of options trading, granting its users access to free articles, guides, and real instructors to expand your knowledge. In addition they provide educational tools on a variety of other topics and provide you with quizzes to put your skills to the test. Their trading simulator starts you off at $100,000 in virtual currency, and once you’re ready to take the next step, you can enter competitions through the simulator itself. One example is that one month, the top three investors who earned the most with the practice money given to them will receive prize payouts in real money.

Virtual Stock Exchange. Market Watch’s Virtual Stock Exchange’s trading simulator might not look the most glamorous, but their bareboned interface offers great ways to elevate your skills in options trading. It’s also surprising that with such a modest layout, Virtual Stock Exchange allows its users to connect to their personal Facebook accounts and begin the trading process immediately. The program allows you to trade in real-time with your virtual portfolio, discuss strategies with other users within your game, and provide the option to customize and create either public or private games. One thing to note is that Virtual Stock Exchange does not allow trades under $2.00, so keep that information in mind before entering. Pro-tip: If you are looking for a advanced level day trader simulator check out this one out from MarketWatch. The Options Industry Council (OIC) The OIC is a group whose sole purpose is dedicating itself to bettering the education of individuals, including investors, advisors, and managers. In addition to their core program, they provide many learning tools such as a multi-part overview of how options work, detailing the benefits and risks of trading, and courses on options pricing. Additionally, their comprehensive website offers seminars, on-demand videos, and even events you can attend. Their trading simulator differs in that users do not use virtual currency but rather the OIC uses a Position Simulator that explains what affects the price of options and uses a mathematical formula with specific inputs to calculate the new price.

Because of this, the OIC does not provide a traditional simulator but offers a sophisticated online calculator that can price American stock options given the specified data. A great, proactive learning environment and extremely user-friendly. How The Market Works. Similar to the Options Industry Council, How The Market Works is another educational company that teaches aspiring investors about their namesake. Their sophisticated options trading software has put their simulator on the map, where it’s currently used by over 350,000 individuals worldwide along with 10,000 high school and middle schools every year. And like with all simulators, How The Market Works teaches you how to invest in the market through trading games online, creating a virtual portfolio using real-time market conditions. The company’s simulator differs from others on this list due to its in-depth environment and numerous features. The program allows users to access Forex portfolios, penny stocks, and mutual funds in both the US and Canadian markets. With their simulator, you can have up to three stock and Forex portfolios and start between $100 to $500,000, They also offer contests each month within different formats, such as penny stocks or short sells, and offers prize payouts. OptionsHouse is a broker that offers the unique feature of using their platform before starting a paper trading account with them. They have what it takes to compete with the industry’s finest due to their efficiency, product quality, and fantastic user-experience interface. Their intuitive platform and functionality provide investors of all levels the tools they need to succeed. Their virtual trading feature is a great way for amateur investors to woodshed their skills and compete with the pros. It’s easy to find quotes and their filing system allows the user to create notes after each trade.

Back in 2015, OptionsHouse also expanded their chart trading feature which conveniently allows you to adjust trades onto the actual chart. You can also see and review an order ticket that’s already filled out before submitting your trade. Their charts also contain all of your past buys and sells, something many other brokers don’t offer. What Else To Look For. Now that you’re better informed of the various brokers that offer options trader simulators, there’s just a few more things we need to review before you begin your exciting new paper trading career. In the process of choosing the broker with the best online simulator, be aware that you’re looking for a multi-level platform that give you things beyond just the numbers. By that I mean a platform that gives you reports analyzing and detailing the ‘how’ and ‘why’ a price changed. Another aspect to consider are the overlying factors affecting an option’s price. It’s very important that you find a medium that is not only fast and efficient but also analytical enough to improve your trading method. Furthermore, analytical reports are a great way to track your own progress as you make your way through the learning process.

Along with numbers, things such as line and bar graphs and charts, along with growth and loss indicators, are crucial as they should reflect actual reports and explanations explaining why certain options prices rose or fell. While analytics is a key factor in your decision-making process, you must also consider their software and its features. Probably even more important for beginners, finding software that’s sophisticated, yet user-friendly, is a great combination for when you finally practice options trading yourself. Tutorials are always a good feature to have and help buttons can offer immediate assistance when you can’t figure out something yourself. Additionally, each trading simulator offers different features so always be prepared to consider what truly motivates you when you finally make your choice. If it’s the thrill of the market and your competitive nature that drives you to becoming a better investor, find a broker that offers games and competitions. That way not only are you furthering your own growth in this field but you’re enjoying yourself as well. The gaming aspect of options trading is a great way of gauging how you fair with the rest of the competition while earning real prizes and money along the way. If furthering your own financial knowledge seems more appealing to you, then be sure to direct your attention to the educational materials a broker offers in addition to their simulators. Theory is just as important as practice and if you feel you need to expand your knowledge some more before getting your feet wet then be sure to find a broker that offers extensive articles, guides, and even videos that teach you about the subject matter. For even further assistance, look for a platform that not only gives you tutorials but will interact with you in real-time. Many of these will not only give you the literature to learn more about options trading but they will also offer suggestions for trading based on current market conditions and trends. The flipside to this is that these recommendations tend to be a little bit “by-the-book” so if you are testing out a new method you should take these with a grain of salt. With all this information under your belt, you are now more fully-equipped to choose a simulator that suits your needs and style of investment.

The key is to take small steps in achieving your goals and don’t get frustrated if you’re not seeing positive returns right away. These simulators are a safe place to make mistakes as well, so the decisions you make in these versus real world conditions may vary. Just make decisions as if you were actually spending money. With that said, I wish you luck on your newest venture in options trading. No related posts. Leave a Reply Cancel reply. COMPENSATION DISCLOSURE. Investing in Real Estate Abroad. Top 10 Explosive Penny Stocks to Invest In 2017 (Hot Picks) Methods For Building And Repairing Credit. Popular Categories.

Tom Smallwood. Tom is a former accountant turned entrepreneur. He is not a financial adviser but does tend to give a lot of financial advice to his friends and colleagues. He currently runs a small online venture and blogs about his research and experiences.