Not all Options are Created Equal: Stock Options vs. Commodity Options

Stock traders looking to venture into commodities often opt for the most convenient form of price exposure, commodity ETFs. Others who have done their homework might choose to trade futures on a low leverage basis but do so in their stock trading account. In either case, these commodity speculators are overlooking some more efficient means of commodity speculation. Convenient options are generally not optimal; we’d love to discuss the advantages and disadvantages of various commodity trading vehicles and logistics. This topic could be attractive to any conservative investor wishing to allocate a small amount of money to gold as a portfolio hedge, as well as those looking to add some aggression to their investment holdings via commodity speculation. The audience will learn which venues, trading vehicles, and brokerage arrangements might be most efficient for their needs. 

Many traders interested in migrating from stocks to commodities assume their stock option trading skills will translate into the commodity markets. However, despite the fact that calls and puts have similar mechanics regardless of the underlying instrument, their similarities stop there. Differences in trading logistics, environment, and characteristics can put unprepared traders at a disadvantage. That said, those with proper education and familiarity might find some glaring advantages to trading options on futures relative to stock options. 

• What are the key differences between trading options on stocks and options on futures?
• How does increased leverage change the options trading landscape
• Commodity margining is more affordable for option spread traders, and option sellers
• Accessible portfolio margin for commodity traders
• Commodity option market liquidity
• Importance of choosing the right commodity broker
• Exercises and assignments in commodities vs. stocks

About Carley Garner 
Senior Commodity Market Strategist and Broker, STOCKS & COMMODITIES Magazine Columnist, TheStreet.com Contributor, and Author 
Carley Garner is an experienced futures and options broker with DeCarley Trading, a division of Zaner Group, in Las Vegas, Nevada. She is also the author of Higher Probability Commodity Trading; A Trader's First Book on Commodities (two editions); Currency Trading in the Forex and Futures Markets; and Commodity Options. Her e-newsletters, The DeCarley Perspective, and The Financial Futures Report, have garnered a loyal following; she is also proactive in providing free trading education at www.DeCarleyTrading.com.
Carley is a magna cum laude graduate of the University of Nevada Las Vegas, from which she earned dual bachelor’s degrees in finance and accounting. Carley jumped into the options and futures industry with both feet in early 2004 and has become one of the most recognized names in the business. Her commodity market analysis is often referenced on Jim Cramer’s Mad Money on CNBC and she is a regular contributor to TheStreet.com and its Real Money Pro service.
Carley authors a monthly column in STOCKS & COMMODITIES magazine and has been featured in the likes of Futures, Active Trader, Option Trader magazines, and many more. She has been quoted by Investor’s Business Daily and The Wall Street Journal and has also been known to participate in radio interviews. She can be found on the speaking circuit.