Options Trading

Bigger Gains, Less Time. Tap Into the Potential of Weekly Options

Traders spoke, and the exchanges listened. And, if the growing popularity of the new weekly-expiration options is any indication, these shorter-term puts and calls will soon join their monthly-expiration counterparts as mainstream trading instruments. Just as the name implies, the newest innovation

25 Proven Strategies for Trading Options

25 Proven Strategies for Trading Options Currently trading options on futures, or are interested in exploring them further? Check out the CME Group 25 Proven Strategies guide on trading options. This useful illustrated guide explains 25 key options trading strategies including: 1. Long Futures 2. S

Lookalike Option

An over-the-counter option that is cash settled based on the settlement price of a similar exchange-traded futures contract on a specified trading day.

Spread (or Straddle)

The purchase of one futures delivery month against the sale of another futures delivery month of the same commodity; the purchase of one delivery month of one commodity against the sale of that same delivery month of a different commodity; or the purchase of one commodity in one market ag

European Option

An option that may be exercised only on the expiration date. See also: American Option, Asian Option.

Back Spread

A delta-neutral ratio spread in which more options are bought than sold. A back spread will be profitable if volatility increases. See also: Delta

Put/Call ratio

The put/call ratio is used as a measure investor of sentiment. It is a ratio of the volume of trading in put options against the volume of call options. A higher volume of calls against puts reflects bullishness among investors, a higher volume of puts reflects bearishness.

Options for Rookies

Mark D. Wolfinger Do the words “stock options” make you uneasy? Without quite knowing why, do you have the feeling that stock options are dangerous and should only be used by speculators? You have plenty of company. Many people are under the same misconception. Do you drive a car? Would

At-the-Money

When an option‘s strike price is the same as the current trading price of the underlying commodity or security, the option is at-the-money.

Core Market Knowledge for Options Traders

By Martha Stokes, C.M.T. © copyright 2007 all rights reserved. Any time leverage is used in trading, it creates inherently higher risk. Therefore, it becomes even more critical for options players to have a foundation of knowledge that goes beyond the extremely narrow scope of “options strategies