If you have ever been curious about how to trade options, start learning here. If you have ever wondered what a trader meant when talking about puts or calls, the bid and offer, our course to learn how to trade options will help explain those things and more. As part of our option trading course, you will get a thorough introduction to options including understanding the contract, how they work, and how to trade options to meet your trading goals and risk parameters. Whether you are a beginner to commodity futures or a seasoned veteran, learning how to trade options and incorporate them into your portfolio can be of great educational value and as a trader you know how valuable it is to have a broader range of tools at your disposal.
Options on futures contracts can often be intimidating because they have their own sets of trading terms and unique fundamentals and learning how to trade options seem like a lot of effort. Our option trading course may help you approach these basic building blocks and help in clarifying some of the common areas of confusion on options.
All option contracts confer on the buyer the right, but not the obligation to take an action on the underlying futures market. In the case of a call, it is the right to be long and for a put it is the right to be short. This right occurs at the price level specified by the option contract – the strike price. For example, a December corn 500 call gives the buyer the right to be long corn from the $5.00 a bushel price level in the futures. The price you pay for this right is known as premium. When you are learning option trading, this is an important point because the price of an option does not always move point for point with the underlying futures market.
All futures options contracts have deadlines or expiration dates and most come to pass before the maturity on the underlying futures market. This means that part of the premium you are paying is for time value. The other part, “intrinsic value”, relates to how far from the underlying futures price the option strike price is.
Options on futures contracts can often be intimidating because they have their own sets of trading terms and unique fundamentals and learning how to trade options can seem confusing. Knowledge is power, especially when you are trying to navigate the risky and often volatile markets. Taking the time to learn option trading can be rewarding.
Trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.
