Investing in Call Put Commodity Options

commodities items

The Stern Options trading platform brings you four categories of assets you can trade on. Namely, stocks, commodities, currencies, and indices. My favourite category is commodities, because the price movements for individual commodities are more easily predictable, being determined by factors which are much simpler to understand than for the other kinds of assets. Investing in Call Put commodity options has never been simpler.

What are commodities?

Commodities are the basic raw materials which are brought to market in their natural state. For example, crude oil, coffee and wheat. Also, some refined commodities such as gold, silver and platinum.

Commodity markets are well-established and traders who deal in them traditionally use futures contracts to buy and sell them. Commodity markets use a set of minimum ‘quality’ and ‘quantity’ standards or standard measures. For example: ounces and kilograms for metals, bushels for wheat, barrels for oil. This is not the case for commodities in the binary options context however. In binary options we don’t actually buy or sell anything physical at all. We are only interested to invest an amount of money on a contract which is concerned with a prediction about what the price of the commodity will be at the end of a given time-frame.

Commodities on the Stern Options platform.

With the Stern Options trading platform, you can invest as little as $25 on a single contract. Profit levels are high for commodities in binary options contracts, and the snap-shot shown below shows this is typically 80%. Stern’s platform makes it easy for you to invest anywhere and at any time, and make high levels of profit like this from the commodity markets without needing a warehouse to store your sacks of coffee or wheat, bars of gold and silver etc. A binary options contract is not a bill of sale or a certificate of ownership. It is a contract that ties an amount of your capital that you decide to invest on the actual change in the market price within a specified time limit.

Moreover, you don’t have to predict exactly what the price will be at the end of that time limit, only whether it will be higher (a ‘’Call’’ option) or lower (a ‘’Put’’ option). Instead of buying and selling, you are predicting whether the market price will be higher or lower than the market price at the moment you make the contract.

gold and silver commodities

The example shows the situation for the gold price. I have deliberately duplicated the chart for this example so that you can easily see the two kinds of chart available on the Stern Options trading platform. The platform shows two assets at a time, with a line graph for each asset. In this case, I have selected gold to show in both charts, but I have also deliberately selected the two different charts on the platform. As the violet coloured arrows indicate, you can switch between charts. The upper chart is a traditional line graph and this shows a simple linear progression for the development of the gold’s market price through time. In this case from 14.00 hrs to 15.15 hrs. The lower chart shows the candlestick representation.

The difference between candlestick-graph and line-graph charts is concerned with how they display opening and closing prices. Viewed side by side like this, and using the same underlying asset and time frame, it is obvious that the trends and reversals are much easier to spot on a candlestick chart than is the case for the traditional line-graph. In Stern’s online educational materials you can learn more about how to recognize the ups and downs on these charts, and how they can be applied to predicting the future direction of asset price movements.

What causes commodity prices to rise and fall?

Predicting asset prices is absolutely essential for your success in binary options. As with all stocks and currencies, commodity prices are affected by basic producer and consumer forces of supply and demand. As well as this, other factors like the weather, trade flows, production quotas and import/export controls come into play. The International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), and the G20 Commodities Report, all agree that the current situation for commodity prices in general is a reflection of high levels of consumption and demand, low inventory, dwindling supply. Political measures can also play a role in influencing prices. For instance, only recently the thirteen member countries of OPEC agreed to cut production levels of crude oil in order to intensify its market price as a response to the reduced supply of the commodity.

Concluding comments.

Commodities are simple to understand, and this makes them a good place to begin with investing in binary options. Profit levels are high and minimum investment requirements are very low.

The general informational support and guidance provided on Stern’s website, or by phone via Stern’s client support team is easily accessible and will help you with any questions you might have when you planning to invest in commodities. For more detailed questions about commodities you can also consult your Stern Options dedicated account manager about trends in the commodity markets.