Covered call to reduce leverage on oil futures?

Discussion in 'Commodity Futures' started by crgarcia, Jul 2, 2008.

  1. A $5 move against you in the CL (very possible given recent volatility) would mean a loss of $5000, disastrous in small accounts.

    What about selling a call, long the future, so the option delta reduces overall exposure to movement of the underlying; thus reducing overall leverage?

    Meanwhile you gain some time decay, too.

    Best to sell an ATM, ITM or OTM call?
  2. Its a synthetic short put. Just short the put and save yourself the commissions..