Comments on: Question about commodity trading, specifically light sweet crude?

By: dasbiber

dasbiber — Fri, 05 Mar 2010 21:50:59 +0000

There are a few different ways to play oil. Futures is a risky and expensive way. The site below shows 4 different ways.
References :
http://www.bestwaytoinvest.com/Oil-chart.html

By: zyberianwarrior

zyberianwarrior — Fri, 05 Mar 2010 21:30:59 +0000

uso (etf) is your better option but read this first

http://moneycentral.msn.com/content/P148498.asp
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By: Frank Castle

Frank Castle — Fri, 05 Mar 2010 20:42:59 +0000

Just buy a Light Sweet Crude ETF.
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By: John K

John K — Fri, 05 Mar 2010 20:17:59 +0000

The choice on whether to use a futures or futures option comes down to how much capital you have to risk, and how you’re going to protect your position now that you’ve decided to favor the bull trend. Picking the position isn’t so important as how you manage the position you’ve put on.

You can go long the December Light Crude contract and place a hedge on it by going short. As the price moves up, you can adjust your short hedge to lock in profits, thereby limiting the risk inherent in an unhedged futures position.

With options, you can do the same by purchasing your December call option ATM and hedging it with a long December put ATM — what’s referred to as a straddle. If the straddle is too expensive for your tastes, use a strangle and buy your December call and put OTM.

However you place your position(s), picking your market and your bias is the easy part. It’s management of the trade that’s the most difficult, since so many of us are more interested in being right than being profitable. Make sure that you manage your risk by creating hedges for yourself, and stick to strict trading rules that limit your losses.

If you’ve any more specific questions, feel free to contact me at Liverpool Derivatives Group at jkinard@liverpoolgroup.com.
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By: jeffpa

jeffpa — Fri, 05 Mar 2010 20:03:59 +0000

Yes, there are options on crude oil.

In fact monthly options, and strike
prices every 50 cents.

DO NOT DO FUTURES CONTRACTS unless
you really know what you are doing.

Be aware crude options are ungodly expensive.

There are strategies such as going long a call
at say 55$ (and lets say a DEC 2007), and then shorting
a nearby (say March) 65 call. This way you arent out
as much.

I cant take the time to explain all the strategies with hedging options(and plus’s and minus’s), but a good
futures broker can.

I use Dain Rauscher Futures in Minn Mn,
1-800-888-7885.

Addendum: I just checked with Dan, and
a December 56 call is 6$ (6,000$).

dec crude is trading around 55$.

hope this helps.
References :