Futures Options trading
Please only use these examples for educational purposes.
Paper trade them.
I was doing my search for option inconsistencies and
here is what I found.
March Swiss Franc futures contract closed at .9110.
(February options follow the March contract)
Feb. Swiss Franc options have 22 days left until expiration.
March Swiss Franc options have 50 days left until expiration.
Feb. Swiss Franc .95 Call options settled at .12.
March Swiss Franc .95 Call options settled at .34.
March Swiss Franc is close to its 52 week high of .9235. If you felt the market will fall, you can put on a reverse calendar spread. You can buy the front month out of the money option and sell a further month out of the money option. The further month option has more to lose if there is a big move, and also the time decay should be slightly greater due to the higher cost per day of the option. Keep this option spread in mind as an alternative to other types of credit or debit spreads.
When putting on any calendar spread, think of buying the cheaper cost
per day options and selling the more expensive.
Even if you are not putting on a spread, this is a great way to
choose which option to buy or sell.
Price and Time trading
Let’s look at May Wheat. The recent high that stands out was
998 which happened on 12/17/07. I enter the price and date into
the Gann section of my Price and Time software.
Below are the exported results:
Gann Analysis
Project Name: May Wheat
Input Values
————
Price: 998
Date : 12/17/2007
Results
——-
Potential High Prices
———————
Price1: 1012
Price2: 1030
Price3: 1044
Price4: 1062
Price5: 1076
Price6: 1094
Price7: 1109
Price8: 1128
Potential Low Prices
——————–
Price1: 980
Price2: 966
Price3: 949
Price4: 936
Price5: 919
Price6: 906
Price7: 889
Price8: 876
Potential Dates
—————
Date1: 01/31/2008
Date2: 03/16/2008
Date3: 05/01/2008
Date4: 06/16/2008
Date5: 08/02/2008
Date6: 09/18/2008
Date7: 11/02/2008
Date8: 12/17/2008
Notes
—–
When price and time meet, we have a potential reversal point in the
market.
