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not sure

  1. im not sure if this is the right forum for this, but what the hell. Im looking at selling some out of the money calls on wheat, it is highly unlikely they will hit. I guess my question is on selling out of the money calls and puts, what are the risks?? Chances are they will just expire worthless meaning i get to keep my premium that i paid right??
     
  2. There's a guy who posts here called Young trader. From reading some of his posts, he seems to be fairly well versed on the agricultural commodities and probably can give you some guidance. Look him up.
     
  3. well.., selling far OTM option is nice strategy, and yes we can keep the premium if the option expired worthless. But we have to watch out very carefully with our margin, because selling option required a maintenence margin. And when the market price goes near to our strike price, the margin require with go bigger and bigger..:(
    so make sure you play at far.. far.. OTM price, so the market price won't get you! :D
     
  4. Are you trying to take a naked option position on wheat!? :eek:
     
  5. well yes.., i do selling naked option, but we have to be extra carefull of course. we have to check the historical price movement first before we enter it
     
  6. What if wheat makes a big move before expiration and your OTM options is now ITM... It is never as easy as it looks.
     
  7. why don't you do a covered call??
     
  8. you can protect yourself by putting an open stop in the future. Though still its dangerous due to eventual locked limit up/down days. Another way is that you buy cheaper options with higher/lower strike than the written one which is good during low volatility but reduces your potential profit. Depending on the risk you are willed to take you can lets say write 3 and buy 2 or 1 or whatever. Many ways to play this.
     
  9. He ran through a hundred and thirty million dollars -- his cash reserves, his savings, his other stocks -- …. He had to mortgage his house. He had to borrow money from his children. He had to call Sotheby's and sell his prized silver collection -- ….. and on and on.

    A 5-year old article still worth a read……
     
  10. i know.. :)
    well option is not as easy as we thougth, i ussualy stay on my money management. Ussually i close my selling position when my premium become double, i won't wait until it became ITM
     
  11. well in case of locked limit days you will not be able to react, it will just open ITM and you are in or your broker has already liquidated in case there is not enough money on your account to digest the hit. Anyway he will call and tell you.