Futures Options trading
Please only use these examples for educational purposes. Paper trade them.
I was doing my search for option inconsistencies and here is what I found. I am looking at how much an option costs per day compared to an option from a different month in the same futures market.
December T-Bond futures contract closed at 113-25March T-Bond futures contract closed at 113-26
Dec. T-Bond options have 26 days left until expiration.March T-Bond options have 120 days left until expiration.
Dec. T-Bond 120 Call options settled at -02 (2 ticks).March T-Bond 120 Call options settled at 28 (28 ticks).
The March 120 Call is 14 times more expensive thanThe Dec. 120 Call, but it ONLY has 4.6 times more time left.
Dec. T-Bond 108 Put options settled at -02 (2 ticks).March T-Bond 108 Put options settled at -24 (24 ticks).
The March 108 Put is 12 times more expensive thanThe Dec. 108 Put, but it ONLY has 4.6 times more time left.
When putting on any calendar spread, buy the cheaper cost per day options and sell the more expensive. Even if you are not putting on a spread, this is a great way to choose which option to buy or sell.
Price and Time trading
Let's look at March Wheat. The recent high that stands out was 966.50 which happened on 09/28/07. I round off the price to 967 and enter the price and date into the Gann section of my Price and Time software. Below are the exported results:
Gann Analysis Project Name: March Wheat
Input Values ----
Price: 967
Date : 09/28/2007
Results
Potential High Prices
-------
Price1: 981
Price2: 999
Price3: 1013
Price4: 1031
Price5: 1045
Price6: 1063
Price7: 1077
Price8: 1095
Potential Low Prices
-------
Price1: 949
Price2: 937
Price3: 919
Price4: 907
Price5: 889
Price6: 877
Price7: 859
Price8: 847
Potential Dates
-----
Date1: 11/11/2007
Date2: 12/26/2007
Date3: 02/09/2008
Date4: 03/26/2008
Date5: 05/11/2008
Date6: 06/26/2008
Date7: 08/12/2008
Date8: 09/28/2008
Notes--When price and time meet, we have a potential reversal point in the market.
No comments:
Post a Comment