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Make Money with Oil Futures Options
Last week we wrote about how you can make money trading options. This week we look at a specific niche that can be very profitable, options on oil futures. First let us look at the difference between futures and options. Then we look at how to combine the two to make money with oil futures options.
Futures versus Options
Futures are standardized contracts between two parties to buy or sell a specified asset of a standardized quantity and quality for an agreed upon price set at the time of making the contract. Both buyer and seller are obligated to satisfy the terms of the contract. On the other hand an options contract gives the buyer the right to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date. And, the buyer is under no obligation to do so. But, the seller is obligated to fulfill the terms of the contract if the buyer decides to execute the same. Futures contract traders often enter and exit trades without remaining in the contract until expiration. The same applies to options trades. A common way to minimize risk in futures trading is to purchase options contracts on futures trades. We suggest that it is possible to minimize risk and make money with oil futures options in today’s markets.
Russian, Ukraine, Crimea and Oil Futures
There are a lot of commodities and stocks for which a trader can buy or sell futures contacts. We are looking at how to make money with oil futures options because of the volatile nature of the oil and gas market today due to the annexation of Crimea by the Russian Federation, the continued attempts by Russia to foment unrest in Eastern Ukraine and the distinct possibility that Russian natural gas and oil will cease to flow through Ukrainian pipelines to the European Union.
Make Money with Oil Futures Options: a snapshot of the market
As of the morning of April 29, 2014, CME crude oil futures quotes...