Stocks & Commodities V. 31:5 (36): Futures For You by Carley Garner

Stocks & Commodities V. 31:5 (36): Futures For You by Carley Garner
Item# V31C05_554GARN
Availability: In Stock

Product Description

Futures For You by Carley Garner


What are the option greeks and can they be applied to commodity options?

Collectively, the option greeks are a group of equations used to measure and identify the sensitivity of an option price to outside forces such as price changes in the underlying asset, the passage of time, or changes in market volatility. The greeks can be useful to option traders in many ways, but are most often used as a proxy for trade probability.

The greeks are similar to other market tools in that they tell traders what has already happened, not what will happen in the future. This is the case despite some option probability software that attempts to project trade probabilities. For instance, the greek calculations take into account todayís market environment but could adjust dramatically if volatility or market sentiment changes significantly tomorrow. In other words, the greeks and any resulting probability calculations are dynamic, not static. Accordingly, traders should refrain from allowing favorable greeks to lure them into complacency.

In the case of commodity options, I argue that the greeks might be less reliable than is the case for options on stocks. This is partly due to generally less liquid market conditions (although many commodity markets are highly liquid) and leveraged underlying assets.

Here is a list of what I believe to be the most useful greeks along with a short description of the role they play in market speculation. Iíve listed them in the order of what I believe to be their relevancy.

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at users can view the S&C Digital Edition in the subscriber's section on

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order