Why have commodity options on futures become such an increasingly popular investment?
Commodity options make it possible to realize a potentially substantial
profit, in a short period of time, with a limited-risk investment. Under no circumstance, can the loss exceed the cost of
purchasing the option including transaction costs. Other advantages include:
leverage inherent in options.
- The liquidity provided by established competitive
- The flexibility to respond rapidly to market opportunities.
- The ability to follow the value of your investment on a day-to-day basis.
- They staying power to weather temporary price setbacks without incurring additional risk or cost.
- Freedom from the margin calls that many other leveraged investments are subject to.
- Strict federal and industry regulation to which options trading is subject.
- The ability to buy and sell quickly due to market liquidity.
- There is no guarantee that any of these advantages will result in profits.