F.A.Q.
- Why sell Options instead of buying? A study done by the C.M.E. revealed that over 80% of all options expire worthless. We use this fact to identify out of the money options that have a high probability of expiring worthless. We have also developed an options model that comes with your opened account. Our proprietary options model will help you identify options that have at least a 80% chance of expiring worthless.
- What is margin? Margin is a good faith deposit of funds used to initiate a position on the underlying commodity. Margin is set by the C.M.E. to maintain all positions.
- Leverage in commodities? One thing that all traders should know is that commodities and commodity options are highly leveraged instruments. A small amount of money can be used to control a large amount of the underlying. Therefore, leverage can work for you and against you.
- What Is Time Horizon? There are quarterly cycles on futures contracts. Each of the quarterly contracts have what are called “serial option” expirations that occur monthly.
- How much time commitment? Time commitment is all based on the interview and experience of the client. If the client wants to learn more in depth, then I can suggest some books to read. Most of our clients are professionals and do not have the time to spend 6 hours a day watching the market. At the end of the day, you only need to log in to your account to make sure your positions are out of the money. If there are any special conditions, we are always a phone call away.
- Expected return? Our goal is to take in at least 10% on every ten thousand dollars in our account per month.
- Money Management? In our experience in trading, we have found that money management is the key to any good trading plan. we always trade spreads and not naked positions. Therefore your risks are defined in each trade. We compare risks to rewards thoroughly before we recommend a trade and the E-mail recommendation form outlines “if, then” scenarios to give you a complete picture of the trade.
- What markets to trade? In our experience, we have learned that trading in the most liquid commodity markets are the best venue for our type of trading. We focus our trading/market making on the most liquid contract traded on the CME, the Euro currency contract. We hedge by trading other negative correlated and highly liquid markets like the U.S. Treasury thirty year bond. We monitor and trade all markets, and we have found in the last five years that the Euro currency contract traded on the C.M.E. is the most consistent market from a risk/reward standpoint for monthly returns.
- How much money is required to start? Our program trade is based on ten-thousand dollar increments. On a ten-thousand dollar account, we would suggest two positions. So naturally, you can start with a minimum of 5k.
- How do I get started? We start by having a quick conversation to explain more about the methodology and how it fits in to your trading plan. After that, we walk you through the account opening process. Once your account is opened, we will send over our proprietary options model, and with a phone conversation, we can walk you through the steps of implementing the trades.
Comments on this entry are closed.