RISK OF LOSS IN TRADING FUTURES OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
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An option selling strategy can potentially profit whether a market goes up, goes down, or simply goes sideways.
Put time on your side:
Nothing can stop the clock. All other inputs remaining constant, an option loses value simply with the passage of time.
A strategic option selling program may involve the sale of options and simply watching those options decay until they are closed.
Potential tax advantages:
Commodity option selling may potentially offer some tax advantages that may not otherwise be available.
Trade implied volatility:
Options can be used to trade market direction, but can also be used to trade changes in implied volatility levels.
A commodity option selling strategy can potentially offer you further portfolio diversification.
THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
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Long Leaf Trading Group, Inc. is a futures brokerage firm established in 2009 and headquartered at the Chicago Board of Trade Building in Chicago, Illinois. CFTC registered as an Independent Introducing Broker and a member of the NFA, Long Leaf Trading Group’s brokers are veteran futures industry professionals.
Our services are dedicated to serving small individuals to large institutional customers. We pride ourselves on providing our clients the tools, resources, and experience that they deserve. That starts with our people.
At Long Leaf Trading Group, we firmly believe that futures brokerage should not be a one size fits all solution. Though our customized approach, we work diligently with our clients to tailor our service based on our client’s individual needs.
FREQUENTLY ASKED QUESTIONS
Well, it depends. Selling options does carry its own set of risks, and selling naked options does expose an investor to unlimited loss potential. That being said, however, Time Means Money only uses spread positions, which allows potential losses to be minimized and defined to be in line with the investor’s risk tolerance levels. Of course, selling options is not suitable for all investors and you should make sure such strategies make sense for you in light of your risk tolerance and financial circumstances.
Selling options can be as active as you want it to be. This strategy is designed to take advantage of the unstoppable power of time, however, and therefore trading may be not be frequent or as active as with other strategies.
Margin requirements can and do change-sometimes rapidly-when selling options. Although initial margin requirements may be small compared to trading the outright contract, these requirements can increase rapidly. These rapid increases can subject the option seller to a margin call and more capital must be deposited to maintain the position.
Option selling has the potential to have a high winning percentage if performed using sound option trading principles and solid risk management techniques. That being said, option selling comes with risk just like any other trading strategy and without proper risk management techniques in place a losing trade can wipe out many winning trades.
You can participate in commodity option selling using an IRA account. Your account must be maintained and held by a registered trust company or financial institution. These companies will hold and maintain your funds, provide regular account statements and provide other services. There are fees involved, and you may want to look at multiple companies before making a decision on which custodian to use.
The simple answer to this is YES. Certain strategies like naked option selling expose you to unlimited risk. There are other strategies, however, in which risk can be quantified. Long Leaf Trading uses limited risk strategies in its Time Means Money option selling program. Some of the primary strategies utilized include credit spreads and iron condors.
YES. The Time Means Money program is designed to not only assist you in your option selling strategies but to educate you along the way. A TMM broker can present trade ideas to you, assist with risk management techniques and guide you through every step along the way. We are here to help in any way possible, and can provide as much or as little service as you require.
Many markets now have nearly 24 hour liquidity Monday through Friday. This may allow you to initiate or close positions almost anytime during the trading week. There is no market access on weekends, however, and markets can and do gap up or down at times.
Depending on market conditions, the Time Means Money Program may use directional strategies, volatility-based strategies or market-neutral strategies. Some of the most commonly used strategies include short call and put spreads, iron condors and iron butterflies.
To open an account, simply give us a call or click the Open Account tab at the top of the homepage.
Simply give us a call to discuss your needs. Our licensed brokers are here to answer any questions you may have and assist you in any way.
No. Option selling is not suitable for all investors. Make sure such strategies are appropriate for you in light of your financial circumstances. Only trade with risk capital defined as money you can afford to lose!
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