Individual Futures Options Solutions

E-Mini S&P 500 futures.

In the area of the top there was a purchase of today's (with expiration today) put with a strike of 4000 for 1.00 points ($50). In the first “poke” down, the option cost 20.00 points ($1,000), that is 20-times of premium paid were made. At the beginning of the second “poke” down, the option cost 34.00 points ($1,700), i.e made 34-times of premium paid.

"Stop Loss". Corn futures.

There is a short position in a futures (sold futures). The stop loss level was chosen above the high of 685-0 (red circle). If there was a stop order at 685-0, it would have been triggered (blue area). At the same time, in the end, the market fell and would have brought profit. But the trader was left without a position. Buying a call option with a strike price of 685-0 with sufficient time until expiration would guarantee protection above the 685-0 level, while leaving the position open to profit in the event of a fall. The trade-off for staying in the position is paying an option premium, which would increase losses above the 685-0 level if the market closed above that level on the expiration date.

"Gap". Oil futures.

There is a short position in a futures (sold futures). The stop order is at 76.00, limiting potential losses. However, significant news came out over the weekend and the market opened with a “gap” and the stop order was executed at a price of 80.10, realizing additional losses. If, instead of a stop order at 76.00, a call option with a strike price of 76.00 had been purchased, it would have guaranteed the position to be closed at 76.00. In this case, the maximum additional loss would be limited only by the option premium, which would be significantly better compared to an executed stop order at a price of 80.10. Moreover, since using an option as a “stop loss” there is no need to close the position, there was still a chance (if there was enough time before the option expiration) to wait for the fall and realize the profit as a result.

Oil futures.

Current price 71.00. The forecast period is 3 months. The break-even range is 59.70 and above. If you just buy futures, the break-even range is 71.00 and above.

Natural Gas Futures.

Forecast: Futures will not close below 2.200 today. Such a contract is purchased and $10.75 is paid. The maximum payout under the contract is $20.00. And if the market closes above 2,200, the contract will pay out $20.00, which means $9.25 in profit (20.00 received minus $10.75 paid).

Gold Futures.

Forecast: Futures will rise. You can buy a call with a strike of 2060 at a price of 21.50. Moreover, on the expiration date, profitability will be achieved only at a level above 2081.50. Below these levels there will be a loss.

By adding several other options, you can get the following configuration: The price at which losses begin is moved below 1990.00. Trade-off - losses increase below 1990.00 compared to the limited losses of 21.50 points in the situation of just buying a call.

Gold futures.

A long position was opened at 2050.00 (red circle). An option combination has been added at the price (green circle). Which made it possible to reduce the breakeven price to 2022.10 on the options expiration date without increasing the downside risk. Compromise - there is no profit potential above the price of 2022.10.

Sugar futures.

When prices are in the green rectangle, an upward trend is identified. The entry point is determined at the level of the blue rectangle. A put is sold with a strike at the level of the blue rectangle (1700). If on the expiration date the price was below 1700, the put would be executed on the futures and a long position would be opened (futures purchased) at 1700. In this case, the purchase price would be improved by the amount of the premium received from the sale of the put. In the real situation, the market did not reach the strike levels. The only profit was from the put premium. It’s not so offensive compared to the situation when there would be an order to buy futures at the level of 1700. It is also possible for the price to go below the strike and then return above the strike on the option expiration date. In this case, there will be no position in the futures, and only the premium will be earned.

The average daily price range for the last month exceeds the daily ranges for the last two days. Short-term options are purchased, which can bring profit if the daily price range increases.