Below is an illustration trading futures options on Gold. Our post shows bullish and bearish positions using a combination of call and put options.
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Trade Options on Futures
Gold * Directional & Neutral Positions
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Gold
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Term Structure
Volatility
Notes:
Contract Size - 100 ounces.
Tick Size: Outright: dollars and cents with 0.10 points=$10
Trading Hours: CME Globex: Sunday - Friday 6:00 p.m. - 5:00 p.m. Eastern Time (CST).
* Tip: Click here to read a helpful tip about Gold futures and options
Gold
* Tip: Understanding what the numbers mean when looking at Gold prices. The quotation you see is U.S. dollars and cents per $0.10 tick. Each contract you are buying or selling is price per ounce x 100 oz. A 1 tick move is $10. Notional value of $1,318.10 / oz x 100 oz = $131,810 USD per contract.
* Tip: Click here on enlarging images
Strategies
* Tip: To view a larger chart image, simply right click on the image with your mouse. Next, select view image. Be sure to click the back arrow on your browser to go back to the original page.
The % yield shown in the diagrams below represent an estimated return on margin from projected dates shown below. The structure has positive time decay which is an advantage over holding outright options.
Calendar Call Fly
The structure has positive time decay and positive Vega if gold prices were to rise with increase in volatility.
Strategy Target Range
VSwap Bearish
WBelow is a structure with positive time decay where changes in implied volatility would have a negligible impact on the position. The ratio of theta to vega starts as half and eventually doubles over time. Initially, it would take 2 days of time decay to negate any adverse change in implied volatility.
Strategy Target Range
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