Option Trading Information
Increase You Option Trading Information
With These
Commodity Option Terms
As a commodity futures options trader there are several important terms you will want to know. Commodity options are a great low risk way to trade, but as with any industry, commodity option traders have special terms.:
- call option:
- Gives the buyer the right, but not the obligation, to buy
a specific futures contract at a predetermined price
within a limited period of time.
- put option:
- Gives the buyer the right, but not the obligation, to
sell a specific futures contract at a predetermined price
within a limited period of time.
- holder:
- The buyer of the option.
- premium:
- The dollar amount paid by the buyer of the option to the
seller.
- writer:
- The option seller.
- strike price:
- The predetermined price at which a given futures contract
can be bought or sold. Also called the exercise
price, these levels are set at regular intervals.
For example, if Treasury bond futures were at 79-00,
T-bond option strike prices would be at 74, 76, 78, 80,
82, and 84.
- at-the-money:
- An option is at-the-money when the underlying futures
price equals, or nearly equals, the strike price. For
example, a T-bond put or call option is at-the-money if
the option strike price is 78 and the price of the
Treasury bond futures contract is at, or near, 78-00.
- in-the-money:
- A call option is in-the-money when the underlying futures
price is greater than the strike price. For example, if
Treasury bond futures are at 80-00 and the T-bond call
option strike price is 78, the call is in-the-money. The
put option is in-the-money when the strike price of the
option is greater then the price of the underlying
futures contract. For example, if the strike price of the
put option is 80 and T-bond futures are trading at 77-00,
the put option is in-the-money.
- out-of-the-money:
- A call option is out-of-the-money if the strike price is
greater than the underlying futures price. For example,
if T-bond futures are at 80-00 and the T-bond call option
has an 82 strike price, the option is out-of-the-money.
The put option is out-of-the-money if the underlying
futures price is greater then the strike price. For
example, if T-bond futures are at 77-00, and the T-bond
put option strike price is 76, the put option is
out-of-the-money.
- option broker:
- A commodity option broker will execute your trades and provide you with accurate option trading information. Most all commodity option brokers can also execute your commodity and future trades. Be sure the broker you choose is experienced and can provide you with the service you
requirer. The broker I have found to be the most helpful and provide a superior level of serive is Derek
Just email him with your name and phone number, he can answer any questions you might have.
He can provide you with online trading and has 3 trading platforms you can choose from.
Home
Commodity Option Trading System
Contact Us
This option trading information brought to you by:
Traders Edge Publishing
1988 N Valley Dr
Apache Junction AZ 85220
Selling Calls
Buying Calls
Understanding Options
Home Page
Commodity Codes
Option Glossary
Commodity Terms
Option Magic
QQQ Signals
Day Trading Secrets
30 Year Cycle
Charts
Timing
|
