"Trade Recap" shows a practical options strategies as we look at different commodity and financial futures markets. Our videos are meant to show you how we use futures options to manage a particular market outlook.
We give an overview on both risk and profit objectives based on a 1 lot spread. In our videos, we show how the option strategies have performed over time. It is important to realize that our objective in this course is to illustrate planning for a reasonable return with minimal risk on trade set ups. Too often novice traders look at making high returns taking on excessive risk on trading the underlying instrument.
If you go to the section called 'Interactive Tutorial' on our website, we have basic lessons and free resources that can help you understand what we cover here.
Google: Oahu Capital for our direct website
In video 1 of 3, we look at a Trade Recap from Feb - March 2014 on Crude Oil using a "directionless" trade structure called a "Strangle Swap". It's an advanced structure taught in our course allowing one to hold a structure of options earning each day (as opposed to losing) from positive time decay and is insensitive to short price movements. One has time to make decisions if the market breaks out of a range of profitable price objectives and can make adjustments if the market trends higher or lower.
In video 2 of 3, we look at the upcoming week of April 21st using the same trade structure and explain in steps what the objective is on profiting within a given range or making an adjustment depending on the market's behavior. Here, we cover general concepts of the trade structure we looked at in video 1.
In the final video 3 of 3, both Paul Forchione and I cover a specific trade plan of adjustments ahead of the upcoming week's activity (April 21st). If the market breaks up or down, how can one manage the trade and remain in a near insensitive price range earning positive time decay. What adjustment could be made if the view were that the market were going to trend? A final note we didn't discuss is how there is a "theoretical" edge given the level of volatility in relation to the Greek variable "vega". For a more "nuts & bolts", take a look at our other Udemy course on "Learning to Trade Futures Options".
An introduction into what we're covering in these videos. We'll be looking at 4 markets being Crude Oil, eMini S&P, Bonds and Soybeans. We'll start with Crude Oil here and cover technical analysis using DiNapoli Levels in this video. If you want a trial of charting software we use (TradeNavigator or NextVIEW), simply send an email to: email@example.com
Here, we'll take a look at constructing the spread and how we'll monitor using the web tracker sheet we have in our class along with OptionVue.
We'll look at results over a few weeks through February 5th. The spread earned in excess of a 20% return on margin. It's important to understand when trading larger account sizes that the amount of risk one takes on relative to margin is a key part of being successful as a trader. The video here illustrates a 1 lot. When you consider holding a trade with overnight margin and monitoring over time looking at daily volatility, the relationship on managing risk to profit with these techniques is very important.
A look at trading the eMini S&P with a diagonal calendar spread. We cover the inverse relationship between direction an implied volatility along with how to monitor the spread over time.
Continuation looking at results through Feb 5th, 2014.
An illustration using 30 year U.S. Treasury Bond futures options. Note how the option web tracker has a calculator to assist with quote conversions.
Continuation of the spread monitoring through Feb 5th, 2014.
Illustration on soybeans through Feb 5th, 2014. Consider taking our online class and visit our website at:
www.OahuCapital.com for more information. We will establish software trials for reference.
Derek develops client strategies on financial futures and options markets. He uses both technical and fundamental approaches in spread trading.
He publishes weekly market commentary with Paul Forchione a former floor trader on the Chicago Board of Trade (CBOT) and prior market maker on the Board of Options Exchange (CBOE). As managing director for Oahu Capital, his responsibilities include market analysis on U.S. and Asian futures markets.
Derek has received his BA in Finance from Marquette University. He also maintains a Series 3 & 30 license with Oahu Capital as a member of the National Futures Association. NFA ID#0427607