Trading Commodities, Commodity Options and Currencies (Collection)

chapter 11An Option Trade from Top to Bottom

Good traders do their homework. This includes watching the markets on a daily basis, doing chart work, and studying the daily price action. Good traders are constantly on the lookout for patterns and recurrences that could hint at future price moves. It is imperative to properly understand and utilize the various tools available, such as those that measure volatility and momentum, identify emerging trends, and attempt to gauge the all-important fundamental value of the underlying market.

Identifying an Opportunity

Let’s take a look at the coffee market in December 2005 using the May 2006 contract. This simply means that we will be using a coffee contract scheduled to expire in May ...