"Another key piece of evidence is the Commodity Futures Trading Commission's Commitments of Traders Report. This is the report that tells investors what the big institutional players are up to in the futures market. According to the CFTC, there is a humongous short position in the euro for hedge funds and mutual funds. In Garner's view, that means they will be covering their short positions in the near future." ~ Jim Cramer
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This text was sent to DeCarley brokerage clients on May 20th 2015.
There is substantial risk of loss in trading futures and options. Past performance is not indicative of future results.
* Implied volatility in Euro options is elevated, and recent swings in the currency has helped to pump up option prices. Let's sell a strangle using the July options.Read More
Option buying poses significant challenges to traders due to the hurdles of time value erosion, and the necessity to implement positions with near perfect timing. Yet, option sellers face theoretically unlimited risk in return for limited a limited reward. Perhaps the best approach is trading various option spreads which, if structured correctly, work toward mitigating the disadvantages to buying or selling options outright. In this complimentary trading education video we discuss the advantages, mechanics, and execution, of various option spread strategies. Click on the image below to begin watching this free video on option spread trading:
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On the commodity radar:
The truth is, unlike margin on futures contracts, option margin is dynamic. It is almost constantly changing along with market price, volatility, and the exchange’s perceived event risk. Further, many brokerage firms opt to charge their clients margin requirements that are higher than the exchange minimums to compensate for what they believe to be additional risk posed to the client, and more importantly themselves. Accordingly, one will probably never fully understand option margin but it is worthwhile to be aware of the basics to ensure proper strategy development and implementation.Read More
Weekly options are simply options that expire at the end of each week, rather than once a month, or less, as traditional options typically do. The CME Group has listed weekly options on their most popular complexes such as Treasuries, Grains, and stock indices. In each of these products, the weekly options expire on the Friday of each trading week that is not already an expiration day of the standard (monthly) version of the option.Read More
In today's markets, naked option sellers have been searching for alternative methods of collecting premium. However, the debate is still out on whether credit spread trading fairs better in the long run. View video below to learn about the advantages and disadvantages to option selling with insurance, and to determine whether or not this is the strategy for you.Read More