Futures Options and Spreads
Jul0
Please only use these future option examples for educational purposes.
Paper trade them.
I normally write about spread options. Today I want to first take a look at a futures spread. Let’s look at a natural gas/heating oil spread. This is buying one natural gas futures and selling one heating oil futures.
Below are daily, weekly and monthly charts:
Daily
http://deltaneutraltrading.com/062709.bmp
Weekly
http://deltaneutraltrading.com/062709b.bmp
Monthly
http://deltaneutraltrading.com/062709c.bmp
You can trade this as a spread using options. You do not have to just buy and sell the futures. You can buy a call and buy a put instead so you are limited in your potential loss. Even though futures spreads can have less risk, there is still the possibility of unlimited losses.
With buying options, you are limiting the risks. You no longer have unlimited loss potential. But the problem is that you are buying premium. So instead of just buying options, you can buy and sell credit spreads.
For example, from looking at the above chart, we can buy an at the money natural gas call option and sell a natural gas out of the money call. Then we sell an at the money heating oil call option and buy an out of the money heating oil option. We expect the natural gas futures to rise in comparison to the heating oil futures because of the chart.
I go over these types of option spreads in my course. And I look at some market combinations that you might not have thought of. Don’t just use these for the obvious spread markets like, wheat/corn, t-bond/t-note. There are other market combinations for spreads and other ways to come up with the option spreads. You can create a spread using more than one market instead of just two markets. You can also create option combinations that are not typical credit or debit spreads. Think outside the box with commodities options.
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Finding The Best Stock Market Ticker
Jun0
A banner that runs a constant scrolling of current prices of stocks is known as stock market ticker. It gives you information and in real time about the stock market. So, it actually doesn’t teach you about how to buy shares, it only give shares and stock information. Some stock market ticker will also provide new and information about the market, especially if something exciting is happening. Lots of trading goes on in Today’s market, that we can see stock prices comes around on the ticker each little time for any given company. Most of the stocks have a certain amount of delay while some are truly running in real time. You will have to pay a fee if you want to get the actual up to date numbers. Unless you need to buy and sell stock market quickly during the day, it is actually not necessary for you to have the actual up to date stock prices. Through many source online or an online brokerage account, you can actually set up your own stock market ticker to simply show which information you’re interested in. You might want to just see a scroll of the stocks that you have invested in. While you’re considering a purchase, you may want to keep an eye on a single stock with all the breaking news and any other information as soon as you can buy it. From the ticker, you can even get information about stock market holidays. You can also set up a stock market ticker with specific area such as technology stock, or oil companies that you are interested in, or perhaps cars companies, if you like watching numbers moving very fast! Either way, the stock market ticker can be a useful investing tool. Its job is to let you know quickly that something has changed. Then you will be alerted and can search for more information from other new sources to find out what has caused a stock to go up or down.
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