Purchasing Options To Gain Profit

Buying Options To Gain Profit

One of the more common strategies to obtaining massive profits when trading commodities is purchasing options.

It is interesting to trade using commodities as they make excellent speculation vehicles, due to the fact that they are subject to supply and demand movements and may rise and fall intermittently.

If you are one seeking instant gratification for your financial well-being, options and any other volatile investments may not suit you.

This is because like most investments, options’ value decreases over time due to market changes and demands.

They expire and a person who takes a gamble on costly ones has to be prepared to lose money besides just making.

Strategy

To sum it all up in one statement, you should only buy options for a profit when particular commodities have been dwindling for a considerable period.

Or are hovering just around their lowest levels for few years.

Once you found these, you should then buy out-of-money call options with at least one more year to go before expiring and then hope that their value eventually shifts higher.

Identifying what these commodities is really not so difficult.

Commodities can range from natural resources to minerals and oil. \

However, the only commodities that you can use to boost your option buying wins are the ones listed on the futures market.

Such as crude oil, coffee, copper, grains, sugar and wheat.

As well as metals such copper, gold and silver.

In short, things with a high perceived value and that existed to meet the growing market demands.

When researching which commodities, you like to bank your options against.

Starting with researching that particular commodity’s history.

This can be done by looking at long-term charts – usually over 10 years – to obtain info of product’s high and lows over the past decade.

Then, look for call options that have either been at the losing end of a massive corporate sell off or been dwindling at consistent record lows.

Options that are considered volatile – or those that are too dependent on market movements – should be scrapped off your list.

With this strategy, expert advice does not really make the cut.

To be able to gain profits by purchasing options in commodities, you have to step out of the loop for a bit.

Because, ironically, ignorance will do you good at this point.

Sometimes, the expert advice given by the people in the loop might only hamper you from trading and might even create doom and gloom scenarios that are uncalled for.

Because their analysis is usually based on what has happened in the past week, 2 weeks or even month.

Which may not be relevant to this week market outcome.

As soon as the market moves higher, you then sell around 25% of your stakes to capture some profits

You can also do this if the papers are starting to talk about the particular commodity to gamble in.

You should only sell off the remaining stake you have when the market turns parabolic.

Perhaps the most important tip of all is to stay calm if nothing is happening.

You should never force a trade just to make money fast.

In fact, some say that once you have purchased an option under a commodity, you should forget about it altogether and quit the urge to monitor it every single day.

If you see that nothing is happening, leave it alone.

Ultimately, when trading options under commodities, play only with what you can afford to lose, just to be on the safe side.

This particular strategy we have here is actually more tricky to execute than it looks.

So it might take a while before you finally get that big win.

Start small and practice.


Review Of Options Pop

Options Pop is a trading service that offers subscribers alerts on options trades that the company believes have a high probability of success.

The company provides subscribers with trade alerts, education materials, and analysis to help them make informed trading decisions.

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