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Why Trade Options on Futures Rather Than Outright Futures Contracts?By John Thorpe, Senior Broker |
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Why Trade Options on Futures Rather Than Outright Futures Contracts?By John Thorpe, Senior Broker |
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April Hogs satisfied a second upside PriceCount objective before turning sideways with a range bound trade. At this point, IF the chart can resume its rally with new sustained highs, the third count would project a potential run to the 100.96 area.
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Find out more about trading futures options with Cannon Trading Company here.
In the dynamic landscape of financial markets, trading futures options has emerged as a versatile and sophisticated strategy. This strategy allows traders to harness the potential of both futures contracts and options contracts, creating a hybrid approach that offers unique opportunities for risk management, speculation, and portfolio diversification. In this comprehensive article, we will delve into option trading techniques, the role of the Chicago Board Options Exchange (CBOE), the significance of reputable futures brokers with exceptional execution capabilities, and a detailed analysis of Cannon Trading Futures Brokers and their reviews on TrustPilot.
Option Trading Techniques: A Blend of Flexibility and Leverage
Option trading techniques are a cornerstone of modern financial markets, providing traders with the ability to speculate on price movements, hedge risk, and even generate income. Trading options on futures, often referred to as options on commodities, adds another layer of complexity by combining the characteristics of two distinct financial instruments.
There are several popular option trading techniques employed by traders:
The Role of CBOE: Pioneering Options Trading
The Chicago Board Options Exchange (CBOE) has played a pivotal role in shaping the landscape of options trading. Established in 1973, the CBOE introduced standardized options contracts, making options trading more accessible and transparent. Over the years, the exchange has expanded its offerings to include options on a wide range of assets, including equity indexes, ETFs, and futures contracts.
CBOE’s contributions to the options market include the development of the Black-Scholes options pricing model, which revolutionized the way options were valued. This model takes into account variables such as the underlying asset’s price, time to expiration, volatility, and interest rates to determine an option’s fair value.
Importance of Futures Brokers with Execution Excellence
In the realm of trading futures options, the role of a futures broker cannot be overstated. A reputable futures broker acts as an intermediary between traders and the market, providing access to trading platforms, market data, and execution services. One of the key factors that sets brokers apart is their execution quality.
Efficient and timely execution is crucial in futures options trading, where market conditions can change rapidly. A reliable broker ensures that traders’ orders are executed at the desired price and within the shortest possible time frame. Slippage, the difference between the expected execution price and the actual price at which the trade is executed, can significantly impact trading outcomes. Therefore, choosing a broker with a track record of consistent and accurate executions is paramount.
Exploring Trading Strategies with Cannon Trading Futures Brokers
Cannon Trading Company is a prominent futures broker known for its comprehensive services and commitment to execution excellence. Established in 1988, Cannon Trading Company has earned a reputation for catering to a diverse clientele, including institutional traders, individual investors, and hedgers.
Cannon Trading Company offers a range of trading strategies that align with different risk profiles and market outlooks:
TrustPilot Reviews and Broker Reputation
TrustPilot serves as a platform where clients can provide feedback and reviews about their experiences with various service providers, including futures brokers. Cannon Trading’s presence on TrustPilot allows traders to gauge the broker’s reputation based on real-world experiences of its clients.
Positive reviews on TrustPilot often highlight aspects such as superior customer service, robust trading platforms, transparency in pricing, and, most importantly, reliable and efficient order execution. These reviews not only provide valuable insights to prospective clients but also reflect the broker’s commitment to maintaining high standards of service.
Trading futures options presents traders with a unique opportunity to combine the advantages of both futures and options contracts. Option trading techniques, such as covered calls, protective puts, and volatility-based strategies, offer flexibility and diverse approaches to trading. The CBOE’s contributions have been instrumental in shaping the options market, and a reputable futures broker’s role in execution excellence cannot be overstated. Cannon Trading Company and its team of Futures Brokers, with their comprehensive strategies and positive TrustPilot reviews, exemplify the significance of a broker’s reputation and execution quality in the realm of futures options trading. As markets continue to evolve, traders will continue to seek ways to harness the potential of trading futures options in their pursuit of financial success.
Ready to start trading futures? Call 1(800)454-9572 and speak to one of our experienced, Series-3 licensed futures brokers and start your futures trading journey with Cannon Trading Company today.
Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.
Learn more about trading crude oil futures with Cannon Trading Company here.
Trading crude oil futures is a dynamic and potentially lucrative endeavor that requires a deep understanding of the energy markets, technical analysis, risk management, and trading strategies. In this comprehensive guide, we will delve into the world of crude oil futures trading, focusing on a specific type of crude oil, discussing relevant exchanges, exploring day trading techniques for futures, and touching on techniques for trading crude oil options on futures. Additionally, we will highlight the services of Cannon Trading Company, known for their customer service excellence and high TrustPilot rating.
Understanding Crude Oil Futures Trading
Crude oil is a crucial global commodity that not only fuels economies but also presents trading opportunities for individuals and institutions. Crude oil futures contracts allow traders to speculate on the price movements of oil, whether they anticipate its price to rise (go long) or fall (go short). Futures contracts provide a standardized way to buy or sell a specific quantity of crude oil at a predetermined price on a future date.
Types of Crude Oil: When trading crude oil futures, it’s important to consider the different types of crude oil. West Texas Intermediate (WTI) and Brent crude are two of the most widely traded types. WTI is primarily produced in the United States and is known for its relatively low sulfur content. Brent crude, on the other hand, is sourced from the North Sea and is considered a global benchmark for oil prices.
Exchanges for Crude Oil Futures: Crude oil futures are traded on various exchanges around the world, with the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE) being two prominent ones. NYMEX offers WTI crude oil futures, while ICE provides Brent crude oil futures. These exchanges provide liquidity, price discovery, and a platform for traders to engage in both speculation and risk management.
Day Trading Techniques for Crude Oil Futures
Day trading involves opening and closing positions within the same trading day, capitalizing on short-term price movements. Trading crude oil futures using day trading techniques requires discipline, a solid strategy, and an understanding of market dynamics.
Trading Crude Oil Options on Futures
Options on futures provide traders with the right, but not the obligation, to buy or sell a futures contract at a specific price (strike price) on or before a certain date (expiration date). Trading crude oil options on futures allows for more flexibility and risk management.
Cannon Trading Company: Customer Service and TrustPilot Rating
Cannon Trading Company is a brokerage firm known for its services in facilitating various types of trading, including crude oil futures and options on futures. The company’s commitment to customer service plays a crucial role in assisting traders as they navigate the complexities of the commodities markets.
Customer Service Excellence: Cannon Trading Company prides itself on providing exceptional customer service. Their experienced brokers offer personalized assistance, market insights, and trading strategies to help clients make informed decisions.
TrustPilot Rating: The company’s high TrustPilot rating of 4.9 out of 5 stars is a testament to its dedication to customer satisfaction. TrustPilot is a platform where customers can share their experiences with businesses. Such a high rating indicates that customers have found value in Cannon Trading Company’s services and have had positive interactions with their team.
Trading crude oil futures presents opportunities for both institutional and individual traders to capitalize on the volatility and price movements in the energy markets. Understanding the nuances of different crude oil types, utilizing relevant exchanges, and employing effective day trading techniques can help traders navigate this complex market. Moreover, trading options on crude oil futures offers additional strategies for risk management and speculation. As exemplified by Cannon Trading Company’s customer service and high TrustPilot rating, choosing the right brokerage partner can enhance the trading experience and provide valuable support to traders of all levels.
Ready to start trading futures? Call 1(800)454-9572 and speak to one of our experienced, Series-3 licensed futures brokers and start your futures trading journey with Cannon Trading Company today.
Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.
Read more about trading futures here
Trading futures options and commodity futures are both popular strategies in the financial markets. While they share some similarities, there are distinct differences in their structure, characteristics, and potential benefits and risks. In this article, we will explore the pros and cons of trading futures options compared to trading commodity futures, and discuss the risk versus reward dynamics of these approaches. Additionally, we will delve into various techniques used for trading options on futures.
Pros and Cons of Trading Futures Options: Trading futures options offers several advantages. One key benefit is the leverage and potential for higher returns. Options allow traders to control a larger position in the underlying futures contract with a relatively smaller investment. This amplifies the profit potential when the market moves favorably. Additionally, options provide traders with the flexibility to design strategies for different market conditions, including bullish, bearish, and neutral scenarios.
Another advantage of trading futures options is the limited risk involved. Unlike futures contracts, purchased options have a predefined maximum loss, which is limited to the premium paid. This can provide a sense of security for traders, as they know their maximum potential loss upfront. Additionally, options can be used as a hedging tool to protect against adverse price movements in the underlying futures contract.
However, trading futures options also has its drawbacks. Options have an expiration date, which means traders must be mindful of time decay. As the option approaches its expiration, its value may erode rapidly, even if the underlying futures price remains relatively stable. This time decay factor can lead to losses for option buyers if the market does not move in the anticipated direction within the desired timeframe.
Furthermore, liquidity can be a concern when trading futures options. Compared to commodity futures, options markets may have lower liquidity, resulting in wider bid-ask spreads. This can impact the ease of executing trades and may lead to slippage. Traders should consider the liquidity of options on the futures they are interested in before initiating positions.
Risk vs. Reward Dynamics: Trading futures options involves a trade-off between risk and reward. On the risk side, the maximum loss for an options buyer is limited to the premium paid. However, if the market moves against the anticipated direction, the loss can be substantial relative to the premium. This risk can be mitigated by employing risk management techniques, such as stop-loss orders or position sizing based on a predetermined percentage of the trading capital.
On the reward side, trading futures options can offer significant profit potential. When the market moves favorably, options traders can benefit from leverage and achieve higher returns compared to the premium invested. This potential upside can attract traders seeking enhanced profit opportunities. However, it’s important to note that trading futures options requires skillful market analysis and timing to capture these gains.
Techniques for Trading Options on Futures: Several techniques are commonly used when trading options on futures. These include:
It’s important for options traders to understand the characteristics, potential risks, and rewards associated with each strategy. Thorough analysis and consideration of market conditions are crucial for successful options trading.
Trading futures options and commodity futures each have their own advantages and disadvantages. Buying futures options offers leverage, flexibility, and limited risk, but also involves time decay and potential liquidity concerns. It requires careful analysis, risk management, and knowledge of various options trading techniques. On the other hand, trading commodity futures provides direct exposure to the underlying asset, potentially greater liquidity, and no time decay. Traders should carefully assess their risk tolerance, market outlook, and trading goals to determine the most suitable approach for their investment objectives.
Ready to start trading futures? Call 1(800)454-9572 and speak to one of our experienced, Series-3 licensed futures brokers and start your futures trading journey with Cannon Trading Company today.
Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.
12-28-2021


This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.
12-14-2021


This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.
Dear Traders,

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.
11-08.2021



This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading
Dear Traders,
A comprehensive resource for information on options on futures
In this section you will read and learn about the following:
*Options Basics
*Options Strategies for Bullish set ups
*Options Strategies for Bearish set ups
*Options Strategies for Neutral set ups
*Selling Options Premium – an overview
And much more!
Sign up below and INSTANTLY get access to the online tutorial
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.
10-18.2021



This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading
Voted #1 Blog and #1 Brokerage Services on TraderPlanet for 2016!!
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Dear Traders,
Would you like to learn more about options on futures?
Perhaps use options to protect futures positions?
Maybe as a speculation?
Or maybe you have experience and understand the risks & rewards of selling option premium?
Download the report along with examples of different strategies at:
https://www.cannontrading.com/tools/education-futures-options-trading-101
Continue reading “Learn more about options on futures 10-20-2017”