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re: BOIL has become predictable
Posted on 7/28/14 at 2:26 pm to sneakytiger
Posted on 7/28/14 at 2:26 pm to sneakytiger
I trade through fidelity
Posted on 7/28/14 at 2:51 pm to L S Usetheforce
Commodities futures and futures options require a commodity account. Don't mess around with futures contracts if this is your first time. It's highly leveraged. One natural gas contract controls 10,000 million British thermal units for delivery. They really don't deliver, or force delivery, but they will force upon you a warehouse receipt, or make you produce one, and either buy or produce the full payment for 10,000 million btu's upon expiration. It only requires $3,080 in initial margin to buy or sell a contract, and $2,800 to carry it overnight. But if the price declines .01, you need to come up with additional funds, aka a margin call.
Purchasing (options) calls, or call spreads on future's contracts is different. You've established a maximum possible loss, which is the cost of the option on the future's contract. You've purchased the right, but NOT the obligation to buy one future's contract at a specified price.
If you're talking about calls on UNG, BOIL etc, you can do this with your online securities broker. You need to fill out an application to be eligible to trade options.
Again in either (options) case above, buying a call, a call spread, a covered call, a put or a put spread has a maximum loss, which is the cost to enter the trade. If you're talking about selling the above uncovered, you really need to stay away from this until you know what you're doing.
I suspect you're talking about buying calls on Dec/Jan natty gas contracts at $4-$4.0. In that case, open a commodities account and buy the calls. Your maximum loss is limited to your cost. This is what I generally do the most frequently.
A spread is for example buying a Dec $4.00 call, and selling a Dec $4.50 call. Your loss is still limited, but so is your gain. If natty gas goes to $5, you need to produce a Dec futures contract at $4.50, but you have the right to buy one at $4.
Purchasing (options) calls, or call spreads on future's contracts is different. You've established a maximum possible loss, which is the cost of the option on the future's contract. You've purchased the right, but NOT the obligation to buy one future's contract at a specified price.
If you're talking about calls on UNG, BOIL etc, you can do this with your online securities broker. You need to fill out an application to be eligible to trade options.
Again in either (options) case above, buying a call, a call spread, a covered call, a put or a put spread has a maximum loss, which is the cost to enter the trade. If you're talking about selling the above uncovered, you really need to stay away from this until you know what you're doing.
I suspect you're talking about buying calls on Dec/Jan natty gas contracts at $4-$4.0. In that case, open a commodities account and buy the calls. Your maximum loss is limited to your cost. This is what I generally do the most frequently.
A spread is for example buying a Dec $4.00 call, and selling a Dec $4.50 call. Your loss is still limited, but so is your gain. If natty gas goes to $5, you need to produce a Dec futures contract at $4.50, but you have the right to buy one at $4.
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