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Each Tuesday the PFGBEST Weekly Options Report gives you options trades based on measurable market criteria to help you exploit current market conditions in futures, index and commodities markets. Each trade is identified by type of position, has a trading plan, shows current Greeks and projected performance curves, and shows a Volatility Chart with a Price Chart superimposed.

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Each recommended position:

A. Is identified by type of position

• Speculative Directional – options position designed to take advantage of a trend or seasonal expectation.
• Speculative Implied Volatility – options position designed to take advantage of high or low implied volatility.
• Speculative Statistical Volatility – options position designed to take advantage of high or low statistical volatility.
• Systematic – options positions that generally begin delta neutral and which evolve over time as adjustments are made in response to moves in the underlying commodity and changes in implied volatility.

B. Has a trading plan

The trading plan for Speculative positions will state when to close positions. The exit will be triggered when the underlying commodity moves to a specified level, when the position earns or loses a predetermined amount, or when a specific date has been reached.

The trading plan for Systematic positions, on the other hand, will specify adjustment points. Adjustments will be made to reduce exposure to market direction, to changes in implied volatility, or to negative time decay. An adjustment may close some options and add new options in their place or may leave existing positions in place and add new options to them.

C. Shows current Greeks and projected performance curves

The current Greeks show how a position will respond to rallies and declines (delta and gamma), to expanding and contracting implied volatility (vega), and to the passage of time (theta). OptionVue’s Graphic Analysis shows projected results over a range of underlying prices and over the passage of time.

D. Shows a Volatility Chart with a Price Chart superimposed

The Volatility Chart shows how implied and statistical volatility have fluctuated in the past and it shows their percentile ranking over the past six years. The Price Chart shows how the underlying commodity has behaved in the past. It’s a chart for a continuous contract.

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