Yes, you want to trade commodities…Silver, Gold, Oil, Corn, Wheat, Soybeans, and Gold. The most liquid contract with which to trade these are of course the futures markets. But what if you do not have trading privileges in futures or future settled options? You are simply out of luck right? Not so fast.
There are ETFs based on these commodities that also have very robust options markets. Frankly, not all of these ETFs have the open interest and volume to support liquid trading activity, but there are very active ones like GLD, USO, NG and CORN quite readily.
USO TRADE SET-UP
While Crude Oil bounced on Wednesday and Thursday, our short term outlook is still lower. So how could you play this if you didn’t have futures access? Here is a compelling trade set up in USO. The investment objective of USO is for the changes in percentage terms of its units’ net asset value (NAV) to reflect the changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in the price of the futures contract for light, sweet crude oil traded on the New York Mercantile Exchange. Since I am looking for a bearish play in crude, I would Buy (opening) the USO November 33.5 put and Sell (opening) the USO November 33 put for a debit of $0.11 or better with USO trading $33.95 or lower.
This spread is very conservative in capital outlay and enjoys a 6.14:1 reward to risk ratio.
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