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Track 'n Trade Futures End of Day Options

Neutral Option Positions

Video Transcript

In this Track 'n Trade Pro Options Trading Training video, I want to talk to you about Neutral Options positions. Now, to enter into neutral Options positions, all you do is you sell one or more out of the money Call Options, then at the same time sell one or more out of the money Put Options.

For example: If December Euro Dollar Futures are trading at 94.25, you might sell the 94.50 Call, and the 94.00 Put. If the price of the Euro Dollar Futures is anywhere between 94.00 and 94.50- when our Options expire, we get to keep the premium that we collected from selling our Options. As you can see, this strategy can provide a wide profit zone.

With Options straddling the market like this, you'll make money regardless of price direction. The only way you'll lose money is if the price of the underlying Futures moves too far in either direction. But as I'll show you, you can structure these trades, so that you have very wide profit zones, with the high probability that the price will stay within the profit zone. In addition, you can make adjustments to the profit zone if necessary to manipulate the profit zone.

With Options straddling the market like this, you'll make money regardless off price direction. The only way to lose, is if the price of the underlying commodity moves too far in either direction. But as you'll see, you can structure these trades so you have a very wide profit zone. With a high probability the price will stay in the profit zone. In addition, you can make adjustments if necessary to manipulate the profit zone.


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