Remember that futures tradingand options trading can be very risky and you should carefully evaluate your financial position in light of such risk.

I will place a few links to other futures related sites as well. I believe this site used to be a futures broker many years ago.

There are many resources available for anyone who is interested in trading futures or learning more about trading futures.  I wont give you a list of sites you can easily find by going to Google and doing a basic search for yourself.

If you trade options on futures contracts you may be risking more than your initial investment if you decide to sell options premiums as combinations or spreads. Keep in in mind that selling options carries the same risk as selling a futures contract.

Therefore if you intend to sell options you must assume that the risk you are going to incur will be the same as a futures contract.

Also, when trading futures take into account commission costs and the difference between the bid and the offer. Many traders dont take this into account when trading and dont consider these costs as part of their trading strategies.

Also, take into account market gaps and other unforeseen market conditions that may have a negative impact on your position.

RISK DISCLAIMER – PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. TRADING COMMODITY FUTURES AND OPTIONS IS SPECULATIVE AND INCLUDES LEVERAGED TRANSACTIONS. TRADING COMMODITY FUTURES AND OPTIONS INVOLVES A SUBSTANTIAL RISK OF LOSS WHICH MAY INCLUDE MORE THAN YOUR INITIAL INVESTMENT AND IS NOT SUITABLE FOR ALL INVESTORS.

Many traders want some basic guidance to help them learn to trade commodity futures options trading basics. This mini guide should help you understand some general tactics that involve options. The first and the most basic strategy is buying options outright. This usually involves buying futures and commodity  calls if you anticipate the market moving higher or puts if you anticipate the market moving lower.

There are many different options strategies but net options buying is the most popular type of strategy for options traders, especially professional futures options traders. The next most popular type of strategy is vertical bull and bear spreads. These are spreads that involve the buying and selling of commodities future options and selling the same options but with a different strike price.

If you are using call options I recommend buying a call thats near the money and selling one that is out of the money and if you are using puts I recommend you buy a put thats closer to the money and sell one thats further out of the money. If you are looking for a credit spread I recommend doing the opposite and selling the expensive at the money option and buying the cheaper one.

I never recommend traders sell options premiums because the risk is very large and could cost you the same as having a futures contract without a stop loss. All in all, you must be very careful when trading options because of the inherent risk involved with selling premiums. My advice is to start slowly by buying low cost options that are not too far out of the money and working up from there.

Never sell premiums unless you are hedged and always anticipate the risk on a premium that was sold to be equal to a futures contract. Always use limit orders when buying and selling options because the spread between the offer and the bid could be substantial. Also, try to attain the options together as a spread because you will get a better price when initiating the combination instead of legging into the option.

Keep in mind that trading futures and options on futures is only advisable for experienced investors with risk capital. You can lose more than you invest if you trade futures or if you sell option premiums.

There are many different ways to trade futures and options on futures.

Out Right Purchase and Sale of Futures Contracts is the most popular way to trade futures and options on futures contracts.  Many traders start out trading smaller or mini sized contracts to prevent large losses and giving themselves enough time to adjust to the risk and the volatility involved.

The second most popular method of buying and selling commodities and futures is using options. There are two basic types of options contracts. The first one is a call and the second one is a put. You buy a call when you think the market is moving higher and you buy a put if you think the market is moving lower.  Some traders sell options to collect options premium but I dont recommend you do that because the risk is unlimited.

Commodity Futures Spreads

Many traders prefer commodity futures spreads instead of traditional futures trading using outright contracts. While spreading lowers the risk on positions, the upside is also limited.

Most hedgers focus on the spread between the the option that was purchased and the option that was sold. This is called basis and this is something you need to pay attention to when trading spreads.

Commodity Futures Options Spreads

Another way to trade the futures market is to use commodity options spreads instead of outright options contracts. Many traders also combine options with outright futures to create semi hedged positions.

There are many other way to speculate using futures and options contracts.

Keep in mind that futures and options trading is inherently risky  and you could lose your entire investment and still owe your futures broker money due to margin. Remember that you are only depositing a fraction of the value of the contract and if the market moves more than the amount of margin deposited you may create a debit balance.

To avoid debit you can purchase options. This will limit your risk to the purchase price of the option plus the commission paid.

The risk of loss when trading commodities and options on futures is substantial and you can lose more than your initial investment due to margin and leverage.

There are dozens of online trading platforms for traders to choose from. During the past several years trading platforms changed from providing execution abilities to providing back testing and analytic abilities as well.

Some trading platforms allow the user to choose between different data providers and different brokers as well.

One popular platform is the NinjaTrader platform which many commodities and futures traders prefer.

This platform allows traders to back test systems and come up with analysis techniques that can potentially improve trading results.

Another great platform is the Multicharts platform. This platform allows commodities futures traders to back test trading systems using easy language which is the same platform that trade station uses. So traders who chose to avoid paying trading fees or do not like trade station brokerage firm can use Multicharts instead.

Finally, one last platform that I like is Sierra charts. This platform is simple to use but lacks some of the feature   that you will find in Multicharts or Ninja trader but the simplicity of the platform attracts traders who do not need the advanced features of other more platform.

This platform is also quick and simple to set up.

If you are looking for a good trading platform for Commodities futures, you may want to check out some of these platforms.

Many commodity brokers recommend to that traders trade out of the money commodity options.

I recommend that traders take a good look and analyze markets carefully before buying out of the money options contracts.

These options can expire worthless if they dont have enough time value and can become worthless very quickly if they are too expire within 60 days of purchase.

Alternatively, if the market doesnt go your way within a particular amount of time you may have sufficient time decay left in the option to offset it for some value.

Another idea is to purchase out of the money options on commodity contracts and sell even further out of the money options or even a combination of several out of the money options. This is called a ratio spread and may work if the market is set up to make a big move.

Keep in mind that all this is very speculative and out of the money options are considered very risky investments. Only use risk capital to trade commodity futures and options.

Make sure you speak with  futures commodities broker about different risk levels for every option you purchase and or sell before you invest in futures and learn as much as possible before trading.

Also remember that if you are selling options you may lose more money than your initial investment in the option that you purchased.