Hi I hope someone can answer this question for me. I've been trading commodities for some time and now I want to incorporate options with the futures trading. What I want to do is sell options. So if I'm buying contracts of silver I will sell calls against my position and vice versa if I'm selling contracts of silver I will sell puts against my futures contracts. I want to do this outside of the money. I'm not familiar with options and was wondering if someone could point me in the right direction. I need to know the risk of the options I'm writing. If the market moves in the direction I planned I don't want to get crushed on the options I wrote. I suppose I need to learn the deltas and how they relate to the underlying contract and the volatility of it.
Learn the "synthetics". A covered-call is the same as a short-put. A covered-put is the same as a short-call. Why do you really want to do covered-writing? With silver, implied volatility increases during market rallies. Therefore, be a little more careful when doing call-writing. With silver, it's capable of making "dramatic" moves. You can still get hurt very badly on the futures side of your position. Consider trades that have defined/limited risk instead.
I agree with nazzdack, you should get yourself educated on all the aspects of options, including pricing and synthetics, before jumping into trading them.
Indeed. If you are interested in options, then you need to familiarize yourself with the basics, particularly how short options positions perform in conjunction with long underlying positions. There are a number of good sources out there for information on futures options trading. If you want some help, PM me and I'll give you a list of sites, books, etc. that can help you out.