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Modifying a Covered Call Strategy for Commodity Trading

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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.   

A covered call strategy is often considered a relatively conservative approach to stock market investing because it offers traders additional portfolio income and a hedge against downturns.  However, traders hoping to simply apply the same approach to the commodity markets might be surprised.  Due to logistic and mechanical differences between the stock and commodity markets, it is imperative that the traditional covered call strategy is modified for use in the commodity markets.  Join us to discuss the necessary modifications to a covered call strategy to make it appropriate for commodity traders, how to calculate profit, loss, and risk, and tips and tricks to proper strategy development. 
  • What is a covered call strategy?
  • Why is trading covered calls in commodities different than stocks?
  • Two primary modifications to a covered call approach making it appropriate for commodity trading
  • Understanding the risk and reward potential of covered calls in commodities

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.
Modifying a Covered Call Strategy for Commodity Trading
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