HELPING FUTURES TRADERS SINCE 1997

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United Futures Trading Company, Inc. Past performance is not necessarily indicative of future results. The risk of loss exists in futures and options trading. Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results and the risk of loss does exist in futures trading. All trading rates quoted per side.

Applicable exchange, regulatory, and brokerage fees apply to rates shown. Please email webmaster unitedfutures. Open An Account Now Online! This publication is the property of the National Futures Association. If you intend to trade your own account, such an understanding is essential.

Dozens of different strategies and variations of strategies are employed by futures traders in pursuit of speculative profits. Buying Going Long to Profit from an Expected Price Increase Someone expecting the price of a particular commodity trading strategies involving options and futures contracts increase over a given period of time can seek to profit by buying trading strategies involving options and futures contracts contracts.

If correct in forecasting the direction and timing of the price change, the futures contract can be sold later for the higher price, thereby yielding a profit. Because of leverage, losses as well as gains may be larger than the initial margin deposit.

These costs are important. You should be sure you understand them. A gain of this magnitude on less than a 10 percent change in the index level is an illustration of leverage working to your advantage. To profit if you are right, you could sell the March futures contract the lower priced contract and buy the May futures contract the higher priced contract.

Had the spread i. Virtually unlimited numbers and types of spread possibilities exist, as do many other, even more complex futures trading strategies.

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There are four primary strategies we implement involving the writing selling of options. All examples are excluding commissions and fees. Uncovered, or naked writing, involves selling a call OR put without entering into an underlying futures contract. A naked call writer has a neutral to bearish view of a market, while a naked put writer has a neutral to bullish view on a market.

In most cases we recommend selling out-of-the-money options. This means selling a call with a strike price that is above the futures price or selling a put with a strike price below the futures price. In the case of a short call this premium is retained if, by expiration, the futures has moved lower, stayed the same, or moved higher but not up to the strike price of the call.

In the case of a short put the premium is retained if the futures has moved higher, stayed the same, or moved lower, but not down to the strike price of the put. A short strangle is a strategy in which a trader simultaneously sells both an out-of-the-money put AND out-of-the-money call in the same market for the same contract month.

This is the optimum strategy for trading sideways markets. All of the premium which was collected upon the initiation of a strangle will be kept if the underlying futures contract is between the strike prices on expiration. Both options are out-of-the-money. A credit spread is a strategy that involves simultaneously selling an option and buying an option in the same month farther away from the market.

The strategy is called a credit spread because the option that is sold has a greater value than the option that is purchased. Therefore, when a credit spread is initiated a net credit is received. Selling a credit spread is a limited risk trade. The maximum risk on a credit spread is defined by the value of the width of the spread minus the premium collected at inception.

For the call, you pay 15 points. This loss would be realized if the market is above on expiration. The same type of trade can be executed on the put side. Buy one closer to the money call or put and sell more than one deeper out of the money call or put. The contract size for Silver is ounces. Options Education Selling Strategies There are four primary strategies we implement involving the writing selling of options.