Nevertheless, there are some compelling arguments to suggest that option sellers face favorable odds of success over option buyers, or outright futures traders. But, even putting the odds in your favor doesn’t guarantee a favorable outcome. Here are some aspects of option selling that should be considered before employing a premium collection strategy.Read More
The great thing about trading options is there are no limits to the number of strategies, or degrees of risk and reward. Depending on how an option strategy is structured, it can be a simple lottery ticket (buy a cheap call or put outright), a limited risk range trade, a premium collection effort, or a “free” trade in which the trader accepts theoretically unlimited risk for the prospects of a directional bias without any cash outlay. In this article, we’ll focus on the latter.
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:
Topics covered include:Read More
Cramer has always said that copper is an important metal that could provide investors with a great read on the state of the global economy, as well as gold which hit an eight-month low on Thursday. He uses copper as a reading especially for China.
That is why Cramer spoke with Carley Garner, a technician and co-founder of DeCarley Trading (a commodity brokerage) and author of "A Trader's First Book on Commodities." She is also Cramer's colleague at RealMoney.com.Read More
Often referred to as algorithmic trading systems, or simply algos, an automated futures trading system is a defined set of technical rules and parameters that ultimately determine entry and exit points for a given contract. In the event that all of the stipulated technical events occur, a buy or sell signal is created and a trade is automatically executed without human intervention. Simply put, it is trading on autopilot.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
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
This edition of the DeCarley Perspective was emailed to DeCarley Trading commodity brokerage clients on August 26th, 2015.
* Implied volatility has come back to the Euro, let's take this opportunity to sell strangles using the October options.Read More
This commodity trading newsletter was emailed to DeCarley futures brokerage clients on August 27th, 2015.