Commodities in general have shown extraordinary returns this year. Soybeans, Sugar and Crude Oil are the biggest winners I follow, but numerous Commodities have shown greater returns than Equities this year. The Equities market as represented by the S&P, shown in the Table below as ESM6, has returned more than 3.5% to date this year. In comparison, the Commodity with the biggest appreciation that I’m following here, Soybeans (ZSN6) has gained more than 23% this year. In addition, Corn and Wheat have also shown nice gains.
Take a look at the Table below and I have listed numerous Futures Contracts and their performances so far this year. Crude Oil, Gold and Silver, popularly traded and often talked about, have all had double digit gains. The only losers have been Cocoa, Copper and Natural Gas. Each of those markets had relatively small declines. The question is are Commodities peaking or are they just hitting their stride? The Table also shows the contract high in each Futures Contract for the last three years.
For those of you who don’t follow Commodities very closely, the Table is an excellent snapshot of a multitude of Contracts and the comparison of their price to the end of the year. The question is, of course, where will these prices going to be at the end of the year? While it is always difficult to tell, for those that have inkling and would like to establish a position to take advantage of price movement, Options Trading Strategies may be the best opportunity to participate. Whether you want an Options Trading Strategy with limited risk, or one that may include Short Options, if you have the opinion and the Options Trading Knowledge, there may be an opportunity for you.
Many Options Traders are convinced that they have enough knowledge to dabble in the Options Markets. Take a look at our Options Strategy Network Full Syllabus. It will provide you with an outline of essential concepts that all Options Traders should know. See where you fit in. If you have some curiosity, try a Free 15 minute Options Training Webinar that could get you started on understanding the issues that successful Options Traders evaluate.
Soybeans and Sugar are both up more than 20% this year. Crude Oil is up 18% and Gold and Silver have rallied more than 15%. For Options Traders interested in getting involved in those markets, analyzing the Implied Volatility Skew will enable you to structure a trade that meets your risk/reward requirements. Soybeans, for example, has a strong Skew to the Call side making out-of-the money Calls comparatively expensive. The Call Spreads, however, might be considered cheap. For those that want to get Long at these levels, there are Options Trading Strategies which may be quite interesting. Whether it’s Call Spreads or Long Options Pairs (Buying Call Spreads and Selling Put Spreads), there is an opportunity to establish a position with good value. For those interested in getting Short Soybeans, or any market with a similar Implied Volatility Skew, the Short Fence will likely provide good value.
Options Analysis provides numerous opportunities to devise the appropriate position for your market or volatility bias. At Options Strategy Network we are not brokers, but with 30 years’ experience in trading, we can help you understand much of the information that books will unlikely be able to convey. Contact Us now to get started with an Individual Options Trading Webinar Session.
Options trading involves significant risk and is not suitable for every investor. The information is obtained from sources believed to be reliable, but is in no way guaranteed. Past results are not indicative of future results.