After reading her book you will never look at options the same way again. Just as with her other books, Carley successfully cuts through the nonsense and provides clear, succinct and actionable advice. Carley Garner has written another fantastic trading book that is likely to be an instant classic. Steve Burns NewTraderU. This is one of the most comprehensive books on commodity options.
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A must read A MUST read for any options trader at any level. Bob Lang ExplosiveOptions. Everything you always wanted to know about options, but were afraid to ask. Jeffrey, A. James Cramer. Abigail Doolittle. Bob Iaccino. Scott Shellady. Jim Iuorio. Linda Raschke. Amelia Bourdeau.
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Phil Flynn. Kevin Davey. Steve Burns. Dan Passarelli. Bob Lang. About the Publisher. Titles range from beginning commodity trading to complex options strategies and futures market analysis. About Carley Garner. Carley Garner is a futures and options brokerage with over a decade of experience. Some good, some bad, but all of it has been a learning experience.
Synopsis - Trading Commodity Options with Creativity. Learn the ins and outs of trading options on futures with and experienced commodity broker and the author of several trading books! Why this Book was Written.
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At the time, I had been in the commodity business for four long years at that age, four years seems like an eternity. In my naivety believed I had seen and experienced it all and, therefore, could never top my creation. I was wrong. On the segments, Garner charts a particular futures market and offers a hypothetical option strategy that fits the market analysis. What others are Saying. Carley reached out to colleagues and friends in the industry for feedback. This is what they had to say about her latest book. The latest futures and options trading book by Carley Garner. A sneak peek into Trading Commodity Options with Creativity Trading Commodity Options with Creativity tackles complex topics with a flair of simplicity.
Learn More. Bringing Simplicity to a Complex Topic Easy-to-understand option graphics and explanations. The buyer of a commodity option pays a premium payment to the seller of the option for the right, not the obligation, to take delivery of the underlying commodity futures contract exercise.
- Index of Contents:.
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- Commodity Options - Gill Broking.
- Introduction to Commodity Options.
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This financial value is treated as an asset, although eroding, to the option buyer and a liability to the seller. There are two sides to every option trade, a buyer and a seller. Each of these sides experiences the opposite outcome; if the option buyer is making money the option seller is losing money in the identical increment, and vice versa. Traders that are willing to accept considerable amounts of risk with the prospects of limited reward, can write or sell options, collecting the premium and taking advantage of the well-known belief that more options than not expire worthless.
The premium collected by a commodity option seller is seen as a liability until the option is either offset by buying it back , or it expires. This is because as long as the option position is open the trader is short the commodity option , there is substantial risk exposure. Should the futures price trade beyond the strike price of the option, the risk is similar to holding a commodity futures contract outright.
On the other hand, commodity option buyers are exposed to limited risk and unlimited profit potential, but they also face dismal odds of success on each individual speculation. For this reason, we often refer to the practice of buying options in the commodity markets as the purchase of a lottery ticket. Conversely to the commodity option seller, an option buyer views the position as an asset not a liability until it is sold or expires. This is because any long option held in a commodity trading account has the potential to provide a return to the trader, even if that potential is small.
Conversely, the seller of a call option is obligated to deliver a long position in the underlying futures contract from the strike price should the buyer opt to exercise the option. Essentially, this means that the seller would be forced to take a short position in the market upon expiration. The seller of a put option is obligated to deliver a short position from the strike price accept a long futures position in the case that the buyer chooses to exercise the option. Keep in mind that delivering a short futures contract simply means being long from the strike price.
Options on futures spreads, or even outright short calls and puts, can be useful in any commodity market environment. However, we believe that the best option trading opportunities present themselves during times of extreme prices. In our opinion, commodity markets coming off of long-term highs or lows typically present traders with an extraordinary prospect. However, it is important to realize that just because a commodity seems "cheap" doesn't mean that it can't go lower.
Likewise, while we would never advocate buying or being bullish with options a commodity at an all time high, it is always possible that prices can continue higher but generally speaking options in such an environment are over-priced. As a result, they come with magnificently low odds of success.
Whereas price extremes have no boundaries, they don't last forever, eventually commodity market supply and demand factors will bring prices back to a more equilibrium state. Accordingly, while caution is warranted at extreme levels it is often a good time to be constructing counter trend trades as it could be one of the most advantageous times in history to be involved in a market. For instance, similar to the idea of call options being over-priced when a market is at an extreme high, the puts might be abnormally cheap. Once again, your personal situation would determine whether an unlimited risk or limited risk option strategy should be utilized.
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Please realize that identifying extreme pricing scenarios is easy, it is much more difficult to predict the timing necessary to convert it into a profitable venture. In search of a promising commodity option trade, it is important to look at whether or not the options are priced fairly. Option prices fluctuate according to supply and demand in the underlying commodity market. At times, options on futures prices become inflated or undervalued relative to theoretical models such as Black and Scholes.
For example, during the "crash" of the value of put options exploded as traders scrambled to buy insurance for their stock portfolios or simply wanted to wager that the equity market would go down forever. The increase in option premium was partly due to inflated volatility but increased demand for the instruments had a lot to do with it.