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TFC Commodity Trading Forum

Selling Natural Gas and OJ options?

I do not think you understand the risks involved in trading and I am dismayed that you would be trying to sell your supposed knowledge to inexperienced traders. If you were only expressing to people your mistaken opinions on how to lose your own money, I couldn't care less. But when you step into the arena of charging people to to teach them to lose their money, I have an issue.

Not to mention the fact that the trades you are talking about are in two markets, Nat. Gas and OJ, that many brokers would term the "debit" markets, as in markets where retail traders are prone to find themselves in a debit situation, owing their brokerage houses substantial sums of money.

The trades you are suggesting have two additional layers of risk beyond simply trading the outright futures that you dismiss.

When you trade a futures contract, you take on the risk of simple unlimited price movement in the market. In trading a short option, there are multiple additional layers of risk.

The first being volatility in which you can lose even more money without significant price movement. The second, and quite significant to these two particular markets, is liquidity. The initial liquidity risk you would face in these markets is a relatively wide bid/offer spread in comparison with other, more liquid markets. This will directly affect the bottom line even in quiet trading. The other liquidity risk you will face would be in volatile times, when the bid/offer spread can get from extremely wide to almost non-existent. In the case of a short option, your risk could be many times what an outright futures trade could cost you.

To quote your friend Senior Golfer(Insider) here on the forum, from moments ago:

"Lastly you need to know HOW to trade before you speculate.. Knowing how to trade is something that does not come easy, and it canít be learned from those profiting from your gullibility."

I couldn't have said it any better.

Matthew C. Shelley
Commodity Broker

As always: Trading in futures and options is very high risk investing. You can lose all or more of the money you invest. Only risk capital should be used.

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Selling Natural Gas and OJ options?