Trading Futures | Mike Follett | 3-1-21 | Metals, Agriculture and Bond Spreads
hey good morning everybody a uh futures market to become more accessible uh over the years and what i'd like to do today is spend some time with you talking about how to spread trade multiple segments of the futures market thanks for coming by everybody and we'll see you in just a second all right there we go just make sure everything's lined up well okay we're in good shape hey we got ken rose out there uh in the chats helping out here he's probably been assisting in the chats for a long time but uh i'm the newbie here so i just wanted to verify that it is ken rose hi ken how you doing he does a futurist class by the way every thursday uh called leveraging capital with futures he does an outstanding job you should check that out as an additional resource to this class uh and uh this is mike falette not john mcnichol uh he and i are going to be switching things up a little bit for uh some time just um just to see how it goes hey welcome everybody though this is trading futures uh i'm on twitter my twitter handle is at infolet underscore tda and let's go ahead and hit some disclosures remember the following information is for educational purposes only and what we talk about today is uh just just that it's it's about education and information here in order to demonstrate the functionality of the platform we need to use actual symbols however td is not making recommendations or determining suitability so remember whatever you do in a self-directed account is solely your responsibility now this webcast obviously will discuss futures just remember that futures trading is speculative and it's not necessarily suitable for all investors so double check your suitability make sure you understand the risks and carefully uh consider your own investment objectives before you get started when you're talking about option trading options are not suitable for all investors either and make sure that you understand the risks associated there also when you're dealing with multi-leg option strategies like spread straddles and things like this just be aware there are multiple uh transaction costs that could impact returns and also with futures you do have commission um there's a quick look at um uh actually though those aren't the transaction costs that's just another reminder about those um also paper money is for educational purposes only and uh what happens in paper money is not a guarantee of what's going to happen in a live account because market conditions do change continually also probability analysis that's not a guarantee of an outcome back testing is looking at historical data and what's happened in the past is not guaranteed to happen in the future there's a look at your transaction costs of course remember futures are a bit different from that also remember uh stop losses are not a guarantee of getting out at the requested stop price because they turn into market orders generally speaking and if there's uh stop limits well that limit may not actually get filled at all so be aware of that there's quickly the greeks from delta all the way down to theta and here's our agenda i wanted to take a look at some of the categories associated with futures because there are some things that have been uh kind of in in the spotlight lately from metals and industrial metals all the way down to bonds and what i want to talk about today are just different examples of spread trades on all of these categories uh just different techniques that traders could apply in order to access these areas of the market if they're looking to diversify their portfolio and whatnot along the way we'll take a look at some charts and we'll break down some numbers and by the time we're done we'll have uh you know at least three different paper uh examples going into a paper money portfolio so especially if you're just getting started with futures this could be a terrific class uh if you're a weathered veteran in futures this can help you see different things that could be done with uh with options on futures as well as well all right so welcome everybody again i'm gonna go ahead and switch over to a paper money account and let's start to take a look at things first um let's uh let's see how these uh markets in general are going shall we i'm going to switch over to a chart tab here that's actually the bond market i don't know if you've been watching bonds but bonds had this um you know precipitous sell-off uh in uh both the uh actually that's why that change that's supposed to be the zb over here not the zn db uh but yeah across uh multiple durations bonds have just uh been getting whipped and what we've got here are interest rates on the rise and that could be part of the reason why we've seen some volatility happening in equities is just um you know traders adjusting to a higher interest rate environment and now we've actually got stimulus talks uh you know plan is entering the senate this week i believe and um certainly you know traders might be trying to factor in that influence and how bonds should be trading and how equity should be trading as well but looking at bonds they are up just a little bit not a lot but just a little bit and if we take a look at that bigger picture though bonds have been awfully bearish we'll circle back around and we'll take a look at these one thing a little bit later but one thing that is kind of interesting is maybe some change in the structure of the yield curve as well we'll come back in just a minute and take a look at that let's take a look at these grain markets though because um grains actually after uh you know developing kind of a nickname called the grain train this is soybeans on the left we got corn in the middle we got wheat on the right grains have actually turned sort of into a sideways kind of pattern here and that could be just part of um you know new administration uh you know and trying to figure out trade relationships uh with uh with foreign countries you know that could be just you know a sign that a maybe equilibrium is starting to get figured out but it's kind of interesting how soybeans corn wheat uh all those products uh were extremely volatile but for about the last uh you know month or so a lot of these have actually turned into a sideways kind of pattern there now let me just take a quick look at uh these indexes though because i wanted to see how the equity markets were rolling this morning uh the s p 500 is up about 53 points we do have some strength uh kind of following through there in the uh equity markets uh the nasdaq here is up about 1.6 that's 150 points and the russell 2000 uh that's actually showing the most strength of the indexes here it's up two and a half percent now remember the russell has kind of led the way for the rally that we had in markets over the last couple of months um we see the russell actually being the strongest of the three indices uh this morning we'll have to see if that plays out all right but on to our primary uh subject matter here i wanted to actually take a look at some metals and when we talk about metals here i want to go beyond just you know generally gold because gold is really gold has been weak you know a lot of people you know kind of factor in gold as quite possibly a hedge against inflation interestingly enough let me go ahead and expand this though i'm going to maximize that cell interestingly enough though gold has had a really tough time getting any kind of traction at all uh you know the the thought is that maybe the new hedge for inflation if you want to call it that is bitcoin here we actually have bitcoin uh showing some strength today uh quite possibly putting in maybe well it's kind of early in the day but quite possibly showing some signs of potentially a bounce here for those that use the signal of close above the high of the low day it's not really a close but right now it's trading above the high of that low day from uh last week so kind of interesting or actually no that would have been from yesterday wouldn't it um no it was actually from last week is what they're calling that but anyhow bitcoin it almost seems like quite possibly maybe that's the new that's the new inflation go to but um that's not a metal so i don't want to talk about necessarily bitcoin here this morning but it is kind of an interesting setup here um so gold has been a bit disappointing forward slash gc however you know in the metal space if you're just thinking about metals in general there actually has been you know quite a bit of strength going on part of this might be because of the re you know the the hopes of return to normal activity and a pickup in terms of uh industrial production and uh you know trading back and forth uh economic uh expansion possibly uh in a couple of names on the industrial metal side forward slash s i silver uh over the past couple of months we've actually seen silver i have a fairly strong kind of uptrend in place just if we just go back here to early december silver was down about 22 and right now it's a at about 26. now what what if somebody were looking at this industrial metal here and some might say it's more of an in-between of industrial metal and and maybe an inflation uh type of play here in terms of precious metal let's say somebody were looking at this and they've noticed that after a bit of a pullback in silver quite possibly we might be entering kind of a zone of support and let me show you what some folks might actually be looking at here it's uh quite possibly right around this level in this zone where we're seeing some of these lower shadows kind of developing you know maybe a support level around 26 to 26 and a half right in there somewhere and we're kind of entering into that zone and we've got talks of new potential stimulus activity some traders might actually think that in this zone maybe a product like silver has a chance to bounce okay another industrial metal that um some folks have been watching uh is forward slash he or uh excuse me hg i said he hg uh these are copper futures if you notice copper really has had a big run higher uh comparing that to silver i mean copper's uh had a lot more strength there but um you know i've actually got a fibonacci drawn on there as well copper after a big rally a bit of a pullback as well uh but it's down to about the 50 fib level also we've got um pl and pa those are a couple of other industrial futures uh that many folks might be watching and if you take a look at these as well this is actually platinum futures bit of a pullback here quite possibly entering sort of a zone of support so what some traders might be looking at is you know silver platinum copper they've all had some fairly decent strength they've all had a bit of a pullback here for the last week or so and quite possibly with stimulus talks potentially coming together certainly not ironed out not settled on but maybe there's some optimism here for you know some of these industrial metals to maybe find a little bit of a support and bounce i'm going to jump back to silver though because that's the one that when you're talking about using td ameritrade that's the one that actually has options trading on it so i'm going to shift over back over to silver so if somebody were thinking you know you know maybe they thought we could have a bit of a rally here in silver and yet let's say they're not necessarily interested in taking on the uh leverage and the volatility of the actual silver product itself although they could you know somebody could certainly buy uh and sell these silver futures and just as a quick reminder just so that you know uh kind of what you're getting into when you're trading the actual product itself the actual future you can always head over to the analyze page and hit the fundamentals sub tab and on the fundamental sub tab you can get some information about the underlying future itself you can kind of get a sense for the minimum tick uh the minimum amount that that is going to trade in that's going to be the minimum tick also the value of those minimum ticks and also the multiplier going on here and you know if you've ever used futures in the past um these do carry quite a bit of leverage and they do carry you know a margin requirement the margin requirement for silver is going to be about 18 000 to trade this but it kind of makes sense that it would have an initial margin that's fairly high because you know this product does have some volatility to it and when i say volatility um you know when you're talking about point moves it had a high point here of just over 28 uh and it was just uh you know not too long ago down here at about 20 about 24 ish and right now we're at about 26 but understand just a one point move is going to be worth about 5 000 in terms of profit and loss so there's you know an initial margin requirement it's going to be you know i shouldn't say it's it's going to be steep it just is what it is there's going to be a fair amount of initial margin and there's going to be quite a bit of profit and loss that could be had um you know in a one point move when you think about just the nominal uh values there so you know one way for a trader to kind of approach this if they didn't want that volatility associated is that they could step back and use those futures market or excuse me the options market on these futures and one thing that has happened here uh with silver especially over the last it's been about nine ten months or so is that the option activity has really kind of started to uh gain more and more interest so that's what we'll look at here we'll take a look at maybe an opportunity if someone were bullish where they could use options to trade these silver futures and kind of target the amount of leverage that they're using and target the amount of risk that they have and not even necessarily have to use a stop loss here to protect the downside let's say somebody were thinking that silver had a chance to you know bounce up and maybe get back to about the 28 level right in there okay uh you know one trade idea that some folks might have is maybe they could use something you know like a call spread so i'm going to open up these calls now the options that are available here we've got options expiring in 24 days options expiring in 57 days and options expiring in 85 days just a quick little reminder about these options when you're trading these make sure you understand kind of the expiration you're dealing with it's not such a big deal here with these silver futures options but if we take a look at um the ticker symbol associated with these futures options see how the first three letters are s i k those are going to be associated with the actual contract here matching those matching that same uh ticker symbol set up there so s i k so if somebody were trading these 85 days out s-i-n the actual future that they're trading is this future with an expiration in july so anyhow just keep your eye on that so you know which actual future those options are going to be kind of matched up with okay but let me open these up and we'll talk about a call spread here someone were thinking about a call spread a simple way to to cue one of those up is to just look at an option that's in the money and sell an option that's out of the money right so an in-out spread is one way to uh frame that and let's just say okay the first strike that's in the money here is going to be the 26 somebody wanted to they could right click on this and choose buy a vertical and that would cue up basically a 25 cent wide spread here on these silver futures let me switch this back to single or no not that that's not what i mean uh we'll go with active only i'm just trying to clear up a little bit of space here now if somebody were actually trading this though they might ask the question hey what is what does this all mean in terms of the actual debit that the trader would have to pay this would be a debit spread and what would actually be the maximum gain on this because is it really only 25 cents paid 10 cents to have something that could become worth the difference between those two strikes which is 25 cents here well you got to understand when you're trading futures there's actually a multiplier involved remember that multiplier that we looked at on that previous page that um analyze page where it said the multiplier was 5 000. we're actually going to see that coming back to us here we're looking at these futures options these options themselves have a multiplier of 5 000 and so what that means is that they're not like regular stock options where you see maybe a 25 spread and the inclination is to think okay well that spread then is going to be worth basically you know 250 bucks or whatever it is or 25 multiplying that by a hundred you got to understand that all these um you know uh spread widths and debits here you need to multiply those by 5 000 not the typical that you might think about which is 100 if you're trading stocks so what's kind of nice about this though is that the software if we queue up a spread trade like that and we hit confirm and send on it the software is actually going to do the math for us right so the send button uh you can see the actual max profit is going to be 710.
the max loss would be 540. now that compared to you know the initial margin requirement uh to trade the future itself which is like you know eighteen thousand dollars uh and it's worth you know five thousand dollars a point for good or for bad this could be a way for some traders to access you know a product like this with a much more you know you know comfortable amount of leverage and by the way that is the max loss one thing about it though the initial buying power on this it's probably because the other positions i've got in the portfolio here but the uh buying power effect initially is going to be 585 on this so slightly bigger than the max loss in this case but still something that for many traders could be much more accessible now one thing though is uh i haven't really talked about strike selection other than buying one in and selling one out but if a trader were thinking that hey this could go back up toward 28 you know the trader could obviously look at maybe different strike selection here uh and possibly have a little bit more profitable spread if if the market does have a big move higher so for example we did the uh 2675 here on the uh buy side of this if the trader were thinking you know what i'd like to make this a 50 cent wide spread rather than a 25 cent wide they could just hit this lower strike and sell you know change that to a another strike price higher in this case it'd be 25 cents higher so this would be a 26.75 to a 27.25 and let me just uh click the update on the debit there that's going to cost a little bit more money it's going to cost 21 cents to buy that but here's the way the numbers would shake out the max loss here would be you know 1050 bucks the margin requirement of the initial buying power effect would be 1061 and the max profit would be uh basically 14.50 here and that's not including transaction costs you got to remember those transaction fees but again this isn't just another way you know to structure that spread where if the trader felt like hey this could go up higher if we could have a stronger move higher this is a way to actually bring in uh you know greater dollars worth of profitability here so you know there's no perfect answer in terms of the structure of this but if someone we're going to structure a spread basically i'm just starting with one strike in the money and then choosing a strike price at a higher level that is still inside of the possible level where these futures might go right so if the traders thinking hey we could wind up getting higher than 28 now we got to think on expiration right because this is a spread trade and so you know this trade in order to have its maximum value needs the market to be above 27.25 on the expiration date or it needs to go far enough above 27.25
before expiration that this spread you know could really widen out here so anyhow i'm going to go ahead and put in an example here uh let's just say we did because each of these is going to be about a thousand bucks let's just say we only wanted to risk one thousand dollars here right to just maintain the level of risk so it's not too much you know we could just keep our position size here at one of these just one vertical spread and hit confirm and send and just remember the risk and the transaction costs here and uh let that work i am going to let that work for a few minutes and just see what what happens with that we might come back to that if we need to if it's not getting filled again that's just using you know a spread trade in an area where you know there's been quite a bit of attention lately because of you know all the all the stimulus and the reopening talk right but what we've got are these industrial metals in general that have kind of gotten back down here and quite possibly you know near a level of potential support and so this is one way that a trader could participate in a bullish trade without taking on the initial margin requirement that they would have if they were trading the actual future themselves let's switch gears here because i did mention okay so that uh that trade looks like got filled but now let's take a look at another area of the market let's take a look at grains we kind of uh looked at a an image of grains here a little bit earlier or some charts on grains a little bit earlier and with these grains you know it kind of looks like again we've got a sort of consolidation or maybe an equilibrium of prices coming along here so let's just go with let's spotlight the zc i'm going to go ahead and just hit a single chart on this a1 single chart forward slash zc these are corn futures again so we've got corn that has been kind of uh in a range has been up trending but since it's sort of consolidated now let's say a trader were thinking that you know they felt like that consolidation could continue right they're not terribly bullish they're not terribly bearish they're just sort of neutral on this thing well how would you do that if you're going to buy or sell the underlying future itself well you know one thing that a trader could do is rather than focusing on the actual future they could go back to the futures options market and one thing that's available if futures options are available and i should say this is we're getting into these futures options just double check to make sure you're comfortable with the levels of liquidity there and when i say the levels of liquidity one way to kind of define liquidity is by using volume and open interest i've got open interest on my screen right now but just the more the better generally speaking and what that has a tendency to do is keep those bid and ask spreads on the narrow side right and so this is one of those products that really is is quite actively traded in the options market silver's still trying to pick up a bit um you know but not quite as liquid as something like uh corn futures here but one thing that a trader could do in a product like this is something as simple as like an iron condor um you know an iron condor something that's just high probability and is focusing on a range right just hey as long as we stay within a range you know all these options could potentially expire worthless now iron condors take patience right and they're not as sexy or glamorous for many traders as like a directional spread but if somebody were thinking hey this is going to stay within a range that's a possibility i'm going to go ahead and go back to that trade page and um let's go ahead and cue up an iron condor with these options now if somebody were going to you know select an iron condor one of the ways they could do that is by using a probability analysis approach and they could look at the delta i do have deltas available on my screen here they might look for calls and puts at deltas maybe around less than 20. for example some traders will look for maybe a delta right in here maybe uh on these puts somewhere around 19 deltas maybe 15 deltas but maybe less than 20 because those will have us the high probability of expiring just for fun let's go with these uh five tens okay now how about this on the call side same thing you know trader might look at a delta of less than 20. maybe the 580s or the 585s if if the trader were looking for pretty close to a match here they might decide to do calls at 16 deltas and puts at about 15 deltas and start there and that would create a spread width or i should say a wind space of somewhere between 585 and 510 and it's really easy to cue up an iron condor there's a couple of ways to do it but i'm going to do it by um just holding my control key down on the keyboard first i'm going to click the bit on the 510 puts here what that'll do is uh create an order to sell one of those puts but with the control key still down i'm going to click the ask on the 505 puts and that'll create a five dollar wide spread here and still with the control key down i'm going to jump over to the calls i'm going to click the bid on the 585 calls and the ask on the 590 calls and that'll create an iron condor remember with the control key down click the bid on the options you want to sell and the ask on the options you want to buy and effectively that will put everything together in an iron condor and so we've got uh a mid price here granted that's the mid price but of uh one dollar and 12 cents one dollar and 12 and a half cents now what does that mean well be aware when you're trading uh again these futures uh you do have different uh kind of multipliers to keep in mind and the multiplier on this product is gonna be 50. what that means is that whatever your spread widths are whatever your credits are rather than multiplying those by like you might be familiar with if you're trading stock options instead of multiplying those by a hundred you're going to multiply that those by 50. okay it's the way that's all going to play out there but if you want to save yourself a little bit of brain cell you could actually hit confirm and send and this will show you kind of the breakdown in terms of the max profit max loss kind of what the math all worked out for you there now one thing about this is this does have you know transaction costs uh that are associated so be aware of that impact and in fact some traders might rather than doing just a typical five dollar wide spread uh if they wanted to actually get more risk on this trade because well the risk on this trade is going to be 193 bucks right the credit is going to be a max gain of about 20 or excuse me 56.25 but with your
transaction costs right if someone starts to scale up on this especially if you're thinking about those transactions costs compared to the size of that max gain just got to be aware that those are going to do some digging into those profits so what some traders will do to kind of cope with that a bit is they'll widen out this spread so rather than doing for example a five dollar widespread they might do a ten dollar wide spread now that's going to create more risk in between the strikes but it's also going to create more credit and what it's going to do is with that greater amounts of writ with that greater amount of risk a trader might not need to scale up their quantity to get their to their position sizing levels that they're looking for uh or that they have been um maybe counting on so let me show you what i mean here i got the puts and i just did that the wrong way uh 585.90 on the calls on the puts i need to go from 510 down to 500 there we go so let me show you what i mean see how that credit just bumped up to 250 and the max loss just bumped up as well you know now doing a 10 wide spread we're not quite doubling the max profit here actually it did say we doubled the max profit here um more than doubled the max profit but my guess is the price is just changing that way i don't think necessarily i mean this shouldn't have necessarily just double the max profit usually that profit's going to go down a little bit relative to the strike price width but as you can see here the the max loss is going up so fewer contracts need to be associated now when we take a look at the transaction costs relative to that max profit it can be a little bit easier to kind of deal with and some traders even they might go even another strike wide i don't want to spend all my time just focusing on these strike widths but just trying to help you understand how some traders might deal with you know a situation where they've got um you know a little bit more transaction costs uh and you know one way to deal with that is to maybe widen out the spreads each spread carries a little bit more risk and a little bit more credit so the position size can be kept smaller and still uh the the profitability can still be there that makes some sense all right now let's just say we did um so this carries a max loss now of about 575 per let's just go ahead and kind of like the look of that 10 wide spread i'm going to bump this back up to a 10 wide um so on the foot we'll go back up to 500 right there and let's go ahead and do just for illustrated purposes we'll do three of these ten dollar wide spreads so we'll click one two three on that and you can see here that the max loss actually just went over uh a thousand but still we're right in that ballpark one thing that is kind of nice is that the buying power effect here is only 3 000 or excuse me 373 so this is an example the benefit of futures um you know with the way uh the margin sometimes works is uh you know depending upon the risk of the risk that's in the portfolio uh there could be a smaller buying power effect than one might expect right and it really could help keep more efficiency in the trading even though the max loss is higher less capital required to carry this trade uh but that can change right you got to remember these buying power numbers could definitely change with um you know the risk associated with this spread but it's a defined risk spread all right i'm gonna go ahead and just um if someone wanted to they could analyze a trade like this take it to the risk profile and just double check that it seems like a reasonable thing for them to do remember they could set slices to the break-even point uh i might have already analyzed one in here let me get rid of that first one that i had analyzed uh set slices to the break-even point and then if they wanted to they could even set slices to the charts and evaluate uh you know kind of where those break-evens rest within the price action here success slices to the break even set slices of the charts and then you know they could circle back around and make sure that they're comfortable with this range but you know so this is an iron condor lasting for the next 24 days and that's the range that the traders kind of coping with that's above the most recent high and it's actually right at or maybe just a little bit below that last low but above that 50-day moving average so we'll go ahead and put on a trade there to trade that range so that's just an iron condor right sideways action you know something looking for corn to stay within a range um we'll go ahead and hit confirm and send on that boom all right so that one's filled and then another product here and i mentioned i wanted to come back to this but for example bond futures right we can see here let's just focus on the forward slash zn this is going to be that 10 year and i'll bring up a single chart on this again the ticker symbol is the forward slash zn um you can see here that boy this has just been super bearish a little bit of a bounce here going on and we talked about that we're up about um you know a third of a percent there but not a huge amount of spring in that step so what if a trader wanted to use the option market and just they were putting on a trade anticipating that you know even if we rally we're not going to rally too far maybe they're expecting that we could either stay in a range or continue to drop here you know one of the you know types of option spreads that could be used in that sort of an enviro environment is a short call vertical spread right something that's high probability and out of the money and again the trader could use something like a delta to determine their their spread now remember when we're trading you know products like this you do have multiple expirations here and make sure that you understand which expirations you're selecting and how that is associated with the actual underlying future itself so i'm just gonna i'm gonna open up these options they're 25 days remaining and the ticker symbol znm and we got znm here as well in the underlying future and that's going to be the active contract so you know whatever the price is on this and it is kind of interesting if you're looking at bond futures see how that last trade here is 133 and then that little quote thing 075 that just means that these are trading in 30 seconds and when you look at the option market if you look at the bid and the ask spreads on these options you know those are those have a different type of quotation mark there uh noting that the price on those just be aware that the quote here the double thing there's probably more sophisticated word for that that means that these are going to be trading in 64th and these are trading in 30 seconds so the bond price itself is trading in 30 seconds and the options are trading in 64. just be aware of that if you're going to trade options on these okay so now i'm going to open this up these calls and let's take a look again at the deltas if the trader wanted to do something that's higher probability one way they could start with that is to look for a delta maybe in the range of 30 or maybe even less depending upon the how the price of this works out i'm just going to go with the delta of right at about 30 here they're both about the same distance away from 30. we'll start with this 134 call option and let me go ahead and just i'm going to go ahead and right click on the bid price there just give you a highlight showing you what i'm what i'm looking at here we'll go ahead and right click there and in the menu let's just go to cell and choose vertical so we'll sell a vertical now the default spread width here is 0.25 so this would be 134 to 134.25 and that's going for
uh 6 64 essentially credit you got to remember what that all shakes out to needs to be multiplied by 1000 okay so if you're wanting the same save some brain cells you could always hit confirm and send you'd see here that that breaks down to a maximum profit not including transaction costs of 93.75 and a maximum loss of 160 or 156.25 there's that future situation that we run into uh from time to time here where that buying power is actually less than the max loss some traders kind of like that for capital efficiencies but remember that buying power effect could definitely change based on the risk of this spread okay now again back to the idea of knowing that commissions are going to be a factor here if they wanted to maybe you know risk a little bit more so they could keep their position size down get a little bit more credit coming in they could always widen this that widen this out a little bit rather than going with the 134 to the 134 25 we could go the 134 to the 134 and a half uh let me unlock that so that bumps up to 11 64. and the way that shakes out is 171.88 divided by a max loss of 328.
uh 13 and so again a little bit better credit you know but the commission is basically staying the same right a little bit more risk so that means on the position sizing level possibly fewer contracts but the buying power will go up so for example if we wanted to do three of these one two three we'd be looking at um you know 515 in terms of the max profit max loss uh just shy of uh a thousand bucks that's 984 bucks with a buying power effect of 631 now if we wanted to analyze this one just choose analyze trade and and there's a short call spread what we could do is set our slices to the break-even point just to see where that break even's located and from there if you wanted to see the way that shakes out on a chart we could go back and set slices to the charts and see that this spread wants uh wants the price of the bond to stay basically below this horizontal line so it'd be 134 and uh and uh point 04.5 uh 64 or 30 seconds so anyhow i just kind of giving ourselves a little bit of cushion you know some traders might even choose that to be at a little bit higher level if they wanted to get up there to be equivalent with the gap but i'm going to stick with this one here just a little bit better credit um and a little bit better return on that trade but now you know some of you are getting to know options you know an option trading is my guess some of you are just you know trying to get to know futures what you can do is actually if you wanted to access the option market on futures is maybe do some paper trades on futures options you know with the option strategies you're getting to know you know i'm using spreads here today but some traders will just buy calls or buy puts that type of thing and use that as a basis where you could start to learn by experience about the way these things work in a paper money account without actually taking on any risk and just as a quick heads up if you were ever wondering hey which futures have options if you want to consider trading futures options on those futures what you could do to figure that out very easily is just go to td ameritrade.com but don't log in when you go to td ameritrade.com if you go to investment products then go to futures over here on the left hand side as an investment product then scroll all the way down to the bottom of this page okay so i'm not even logged into the account into uh td account i just went to td ameritrade.com and then i went to investment products futures scroll down and you can look at all these groupings of futures types kind of based on the the category they're in from interest rates metals currency and so forth and you can actually see what products are available for trading and whether or not they actually trade options so for you that are getting comfortable with option trading and you're also trying to blend that with futures trading here's a here's a quick way to just see a guide as to which ones are actually available here okay so that's actually looking what we've done today is we've looked at metals grains and um and uh even bonds uh financial products here so anyhow just trying to give you a sample of all kinds of different markets that you could choose from there and you know one thing i didn't do is actually put in this vertical spread that's going to be at 11 64 in terms of credit i'm going to hit confirm and send on that and and let that work hopefully that'll get filled now by the way um just a quick note i do have um a separate grouping here in case you weren't aware of this you could actually create groupings for these different types of products i've got this section here for futures if we wanted to we could just right click on these products that have gone into the unallocated space and just in that right click move them over to groupings that we might have so i'm just going to switch that over to futures we'll take the corn and move that over to futures as well and these bonds and we'll move those over to futures as well and now we've got kind of this separate section here that's all set aside just for uh our futures products here that could be a good way to learn as well if you're just trying to keep those separate from everything else okay so what have we done here today we've talked about you know just different groupings of futures from metals to ag to bonds and i wanted to show you how a trader could approach that using spread examples here and give you a sample of each of those different types of markets remember the way these products work right they all have different kinds of multipliers and also you know think about different uh strategies that a trader could apply to kind of meet that balance between reward risk and still kind of dealing with um you know the the transaction costs associated as well again i think a good way to learn is to paper trade so i would encourage everybody this week to maybe find one of these futures and put a spread trade on it right identify you know the assumption that that you might have and see what it looks like to put a spread trade on there just for illustrated purposes so you can learn from that okay thanks everybody for your time and hopefully you learned a few things from those examples i'm going to go ahead and just hit my final disclosures here remember though that what we have talked about today is not a recommendation to buy or sell what we're talking about today is just simply trading futures and by the way um yeah i appreciate everybody there for their comments and uh also for your help there ken rose helping out in the chat okay thanks
2021-03-05 09:41
