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Those traders who desire to lower the risk involved with trading will find
appealing the strategy of buying out-of-the-money options. A position can often be established for just a few hundred dollars, or even less.
And when you buy options, what you pay is the most that you can lose (plus transaction fees).
However, these options are regarded as being "long shots" as they rely on a significant move of the
underlying futures price in order to have intrinsic value. As such, it becomes important to filter trades so as to help
improve the odds of success.
In this 43-minute video, you'll learn directly from a commodity trader who employs this option strategy what are the criteria for
determining when is a good time to buy out-of-the-money call options, done in anticipation of a substantial
market rise, and when is a good time to buy out-of-the-money put options, done in anticipation of a market price collapse.
Specifically, you'll learn:
- Timing the option purchase based on price levels and volatility considerations.
- Determining the strike price, expiration and option premium.
- Actual trade example of buying out-of-the-money calls on sugar.
- Actual trade example of buying out-of-the-money puts on orange juice.
- Practical insights into implementing this option strategy.
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This video was produced by Mr. Rick Thachuk,
President of World Link Futures, Inc. which owns the
WLF Futures, Options and Forex Education NetworkTM. It is being made
free of charge thanks to the sponsorship of The Futures Training Division of PFGBEST. To receive this free video, please
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