The introductory course in commodity options trading is meant to provide the skills necessary to analyze and select options that have potentially profitable futures. The course teaches methods in which you can minimize your losses, while improving your chances to profit from anticipated price movement. The course incorporates practical "paper trading exercises" where the student uses knowledge gained from the course to pick the options with the most potential. This gives him valuable real world experience without the risk of losing money.
There are certain terms and concepts that are commonly used during commodity options trading. The basic terms course enables the student to understand the main ideas and internalize them for his own use. The course starts by giving an in-depth definition of an option and the various components, including call options, put options, and the rights and responsibilities of option buyers and option sellers. Common option terms include strike price, underlying futures contract, premium and intrinsic values. The student also learns how to read option price tables in investor's business daily and the different types of orders and how to place them.
The analysis course in commodity options trading teaches students how to evaluate and identify current price trends by analyzing the futures market. It also teaches you how to track premiums and find the cheaper price options with the most potential. This analysis course also teaches the student how to evaluate the best strike prices.The student also learns the practical rules for selecting options based on option type, strike price, expiration date, risk control and dealing with multiple options.
A complete understanding of option volatility is instrumental in your success as a commodity options trader. It is a very important factor in the determination of the best option for maximum profit. Mathematically, it can be described as the square root of variance. This course outlines the uses, abuses, risks and selection criteria of spreads. It takes you through topics, such as straddles and strangles, ratio back and ratio vertical spreads, butterfly and condor spreads. It also teaches calendar, horizontal, time and diagonal spreads.