By www.ProfitableTradingTips.com
 There are many profitable day trading       strategies that can be applied to trading       commodities.http://www.profi...
 Markets move up and down and speculators       on the evolving prices of commodity futures       use both fundamental an...
 A means of limiting risk and leveraging       capital when trading commodities is trading       futures options.http://w...
 A trader can buy puts or calls on a commodity       futures contract just as he or she can buy puts       or calls on a ...
 In trading futures or trading futures options       one is not buying or selling the commodity.http://www.profitableinve...
 Both futures contracts and options contracts       are derivative instruments. In this the base       equity could be cr...
 A trader can engage in oil futures trading or       trading futures options on crude oil.http://www.profitableinvestingt...
 The same applies to live cattle, winter wheat,       gold bullion, and many other tradable       commodity futures.http:...
 The commodity futures market is used by two       groups of traders.http://www.profitableinvestingtips.com/investing-tra...
 The first group includes companies and       individuals that buy and sell commodities       such as gold bullion, crude...
 These folks buy and sell futures or engage in       trading futures options to hedge business       risk.http://www.prof...
 Let’s say that an agricultural cooperative sells       winter wheat produced by its members.http://www.profitableinvesti...
 The price of winter wheat may fluctuate       greatly as there is a drought in North Dakota       and heavy rains in the...
 If these conditions continue wheat prices will       be very high by the time that harvest comes.http://www.profitablein...
 But, if the weather improves in one or both       areas the price of wheat may fall       dramatically.http://www.profit...
 Obviously the cooperative would prefer to be       paid well for the coming harvest.http://www.profitableinvestingtips.c...
 One way to insure this is to sell futures on       winter wheat.http://www.profitableinvestingtips.com/investing-trading...
 The price is currently high (in this       hypothetical example).http://www.profitableinvestingtips.com/investing-tradin...
 However, what if the weather in North       Dakota and the Ukraine gets worse and there       are hailstorms in Kansas f...
 By trading futures options the cooperative       retains the right to sell at the contract price if       the market pri...
 It also preserves the right to not execute the       option and not sell at the contract price if, in       fact, the ma...
 By not ever entering a futures contract but       rather buying options, the trader does not       need to tie up money ...
 The other group of traders is composed of       speculators.http://www.profitableinvestingtips.com/investing-trading/tra...
 They pick and choose which commodities       they wish to trade and engage in trading       futures options on a wide ra...
 depending on where there is market volatility       and the chance for a profit.http://www.profitableinvestingtips.com/i...
 These traders may use tools such as trend       following in day trading or scalping in day       trading in order to ga...
 Because a market speculator does not need       to hedge risk on a specific commodity he can       profit from trading f...
 on a variety of commodities, moving in and       out of trades as opportunity and profits       dictate.http://www.profi...
 For more insights and useful information       about trading stocks, commodities,       currencies, and options, visit  ...
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Trading Futures Options

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http://www.profitableinvestingtips.com/investing-trading/trading-futures-options

Trading Futures Options

There are many profitable day trading strategies that can be applied to trading commodities. Markets move up and down and speculators on the evolving prices of commodity futures use both fundamental and technical analysis in order to gain a profit. A means of limiting risk and leveraging capital when trading commodities is trading futures options. A trader can buy puts or calls on a commodity futures contract just as he or she can buy puts or calls on a stock. In trading futures or trading futures options one is not buying or selling the commodity. Both futures contracts and options contracts are derivative instruments. In this the base equity could be crude oil. A trader can engage in oil futures trading or trading futures options on crude oil. The same applies to live cattle, winter wheat, gold bullion, and many other tradable commodity futures.


The Commodity Futures Market

The commodity futures market is used by two groups of traders. The first group includes companies and individuals that buy and sell commodities such as gold bullion, crude oil, or soybeans. These folks buy and sell futures or engage in trading futures options to hedge business risk. Let’s say that an agricultural cooperative sells winter wheat produced by its members. The price of winter wheat may fluctuate greatly as there is a drought in North Dakota and heavy rains in the Ukraine, both major wheat growing areas. If these conditions continue wheat prices will be very high by the time that harvest comes. But, if the weather improves in one or both areas the price of wheat may fall dramatically. Obviously the cooperative would prefer to be paid well for the coming harvest. One way to insure this is to sell futures on winter wheat. The price is currently high (in this hypothetical example). In selling futures on wheat the cooperative is obligating itself to sell at the current price. However, what if the weather in North Dakota and the Ukraine gets worse and there are hailstorms in Kansas further decreasing the total harvest? By trading futures options the cooperative retains the right to sell at the contract price if the market price falls. It also preserves the right to not execute the option and not sell at the contract price if, in fact, the market price climbs higher. By not ever entering a futures contract but rather buying options, the trader does not need to tie up money in a margin account for the futures contract.

The other group of traders is composed of speculators. They pick and choose which commodities they wish to trade and engage in trading futures options on a wide range of commodities, depending on where there is market volatility and the chance for a profit. These traders may use tools such as trend following in day trading or scalping in day trading in order to gain incremental profits as the market moves up and down.

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Trading Futures Options

  1. 1. By www.ProfitableTradingTips.com
  2. 2.  There are many profitable day trading strategies that can be applied to trading commodities.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  3. 3.  Markets move up and down and speculators on the evolving prices of commodity futures use both fundamental and technical analysis in order to gain a profit.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  4. 4.  A means of limiting risk and leveraging capital when trading commodities is trading futures options.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  5. 5.  A trader can buy puts or calls on a commodity futures contract just as he or she can buy puts or calls on a stock.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  6. 6.  In trading futures or trading futures options one is not buying or selling the commodity.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  7. 7.  Both futures contracts and options contracts are derivative instruments. In this the base equity could be crude oil.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  8. 8.  A trader can engage in oil futures trading or trading futures options on crude oil.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  9. 9.  The same applies to live cattle, winter wheat, gold bullion, and many other tradable commodity futures.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  10. 10.  The commodity futures market is used by two groups of traders.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  11. 11.  The first group includes companies and individuals that buy and sell commodities such as gold bullion, crude oil, or soybeans.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  12. 12.  These folks buy and sell futures or engage in trading futures options to hedge business risk.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  13. 13.  Let’s say that an agricultural cooperative sells winter wheat produced by its members.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  14. 14.  The price of winter wheat may fluctuate greatly as there is a drought in North Dakota and heavy rains in the Ukraine, both major wheat growing areas.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  15. 15.  If these conditions continue wheat prices will be very high by the time that harvest comes.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  16. 16.  But, if the weather improves in one or both areas the price of wheat may fall dramatically.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  17. 17.  Obviously the cooperative would prefer to be paid well for the coming harvest.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  18. 18.  One way to insure this is to sell futures on winter wheat.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  19. 19.  The price is currently high (in this hypothetical example).http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  20. 20.  However, what if the weather in North Dakota and the Ukraine gets worse and there are hailstorms in Kansas further decreasing the total harvest?http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  21. 21.  By trading futures options the cooperative retains the right to sell at the contract price if the market price falls.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  22. 22.  It also preserves the right to not execute the option and not sell at the contract price if, in fact, the market price climbs higher.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  23. 23.  By not ever entering a futures contract but rather buying options, the trader does not need to tie up money in a margin account for the futures contract.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  24. 24.  The other group of traders is composed of speculators.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  25. 25.  They pick and choose which commodities they wish to trade and engage in trading futures options on a wide range of commodities,http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  26. 26.  depending on where there is market volatility and the chance for a profit.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  27. 27.  These traders may use tools such as trend following in day trading or scalping in day trading in order to gain incremental profits as the market moves up and down.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  28. 28.  Because a market speculator does not need to hedge risk on a specific commodity he can profit from trading futures optionshttp://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  29. 29.  on a variety of commodities, moving in and out of trades as opportunity and profits dictate.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options
  30. 30.  For more insights and useful information about trading stocks, commodities, currencies, and options, visit www.ProfitableTradingTips.com.http://www.profitableinvestingtips.com/investing-trading/trading-futures-options

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