One of the most traded commodities in the markets all over the world is ‘crude oil’. Available in abundant quantity, crude oil is one of those commodities that hardly loses its significance even if new and alternative sources of energy as well as fuel are introduced.
With the amount of production constantly increasing and positive behaviour of the market trends, the number of traders in the oil options is constantly going to increase.
If you are scared from the high amount of volatility that has been visible in the oil options lately, there are some simple oil options trading strategies that would save you from such dicey situations and guide you to make profits from oil options trading.
Options Trading Strategies: Long straddle
Being a trader you can generate profits simply by following the derivative strategies in options trading. One such strategy is long straddle. Here, a trader will purchase in long call and a long put by keeping in mind three main aspects – same underlying asset, expiration date of the call and the strike price. The strike price will be near the current market price of the underlying security.
Although many people think that this strategy is a bet that they make, there is nothing wrong in using it as the success ratio is quite good. The reason being, you’ll maximize your profits both, if the underlying security moves up and/or down from the current levels.
Another great trading tip that you should follow while online trading in oil options is short straddle. Here the strike price of put call and a put option is similar. However, the results would be in your favor majorly when a certain price range is followed during the movement.
The major benefit of following this strategy just like long straddle is ‘dual profits.’ Besides, they not only help you to earn some good amount of profit but also minimizes the amount of risk in the entire process.
Using Options tools
You can use specific options tools that is designed to help you instantly as you enter the details. For instance tools like options calculator, margin calculators and softwares will assist you in oil trading process – Right from the perfect time to invest to points worth keeping in mind, once you put your parameters.
Oil Options Trading Tips: Judging Volatility
This options trading strategies might sound strange to many people, but if you are able to judge the level of volatility in the process of oil options trading, you can trade safely. Although this is not as easy as it looks like, a good amount of research and the right type of guidance can surely help you.
Besides, do keep a check on the current affairs in general along with the companies that are involved in production and distribution of crude oil.