22 lines
1.6 KiB
Plaintext
22 lines
1.6 KiB
Plaintext
Chapter 34: Futures and Futures Options 695
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SUMMARY
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This chapter presented the basics of futures and futures options trading. The basic
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differences between futures options and stock or index options were laid out. In a
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certain sense, a futures option is easier to utilize than is a stock option because the
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effects of dividends, interest rates, stock splits, and so forth do not apply to futures
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options. However, the fact that each underlying physical commodity is completely
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different from most other ones means that the strategist is forced to familiarize him
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self with a vast array of details involving striking prices, trading units, expiration
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dates, first notice days, etc.
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More details mean there could be more opportunities for mistakes, most of
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which can be avoided by visualizing and analyzing all positions in terms of points and
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not in dollars.
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Futures options do not create new option strategies. However, they may afford
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one the opportunity to trade when the futures are locked limit up. Moreover, the
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volatility skewing that is present in futures options will offer opportunities for put
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backspreads and call ratio spreads that are not normally present in stock options.
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Chapter 35 discusses futures spreads and how one can use futures options with
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those spreads. Calendar spreads are discussed as well. Calendar spreads with futures
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options are different from calendar spreads using stock or index options. These are
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important concepts in the futures markets - distinctly different from an option
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spread - and are therefore significant for the futures option trader. |