COMMODITIES SECTION

The strategy is simple to implement and remember
Basically it involves having a punt on long dated call options when a commodity price is at either an all time low or at/near historical levels
We bought some sugar calls about 18 months back and did pretty well, just a shame they weren't longer dated as you can see from the chart below
To read more about the trade and the strategy check out the post from our LearnMoney.co.uk monthly newsletter, click below
Buying Options for explosive profits

Or Are Commodity Prices Cheap?

• If you look at the price action over the last 12-18 months commodities aren't as cheap as they were
• But what about if we look at their prices in real-terms alongside where they've been trading over the last few decades?
• Make sure you read the post below entitled 'Commodity Prices Are The Cheapest For 200 Year'
• In this case buying long dated calls could still be a great trade
• If your view is multi-year then look for the longest dated options you can find and this might be a problem as market makers might not be making prices
• If this is the case try and look to buy LEAPS (very long dated options) on the big commodity stocks
• More details on LEAPS

Useful Links

More Commodity Posts