Futures trading strategies

25 Proven Strategies.

Find 25 proven strategies to use in trading options on futures. Examples include butterflies, straddles, back spreads and conversions. Each strategy includes an illustration of the effect of time decay on the total option premium.

Options on futures rank among our most versatile risk management tools, and we offer them on most of our products. Whether you trade options for purposes of hedging or speculating, you can limit your risk to the amount you paid up-front for the option while maintaining your exposure to beneficial price movements.

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About CME Group.

As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. Comprised of four exchanges - CME, CBOT, NYMEX and COMEX - we offer the widest range of global benchmark products across all major asset classes, helping businesses everywhere mitigate the myriad of risks they face in today's uncertain global economy.

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Who We Are.

CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.

Trading Strategies.

Fibonacci expansion: A better way to time price targets.

By Toni Hansen | February 1, 2014.

Here we show how to use Fibonacci expansion levels to establish high-probability target levels and manage open positions as they unfold.

Trading system analysis: Then and now.

Trading system technology advanced quickly in the late 1980s and early 1990s, establishing paradigms that persist today. Here’s a look at where we stand — and where we might go.

Advanced model building for trading the S&P 500.

Support vector machines are one frontier of trading technology’s cutting edge. Here, we use these tools to build a weekly model for stock index futures.

Unlocking the mystery of building trading strategies.

Developing your own indicators is helpful, but putting those tools to work is the real challenge.

Creating custom indicators.

Knowing how to build your own indicators is critical for today’s technical trader. Here, we detail the process from conceptualization to coding.

Avoiding trading paralysis by analysis.

It’s easy to become overwhelmed by too many performance measures. Know what matters in your performance report.

What’s your (market) type?

Recognizing if the market is moving up, down or sideways is key to success. Moving averages can help.

How to set profit targets and control losses.

Using statistical analysis to collect the data needed to build a proper risk management framework.

Fanning profits with W. D. Gann.

By Kent Kofoed | November 27, 2012.

We discuss the proper application of the Gann fan to understand how, and why, it is formed.

Futures Fundamentals: Strategies.

Essentially, futures contracts try to predict what the value of an index or commodity will be at some date in the future. Speculators in the futures market can use different strategies to take advantage of rising and declining prices. The most common are known as going long, going short and spreads.

When an investor goes long - that is, enters a contract by agreeing to buy and receive delivery of the underlying at a set price - it means that he or she is trying to profit from an anticipated future price increase.

A speculator who goes short - that is, enters into a futures contract by agreeing to sell and deliver the underlying at a set price - is looking to make a profit from declining price levels. By selling high now, the contract can be repurchased in the future at a lower price, thus generating a profit for the speculator.

As you can see, going long and going short are positions that basically involve the buying or selling of a contract now in order to take advantage of rising or declining prices in the future. Another common strategy used by futures traders is called "spreads."

Calendar Spread - This involves the simultaneous purchase and sale of two futures of the same type, having the same price, but different delivery dates.

Intermarket Spread - Here the investor, with contracts of the same month, goes long in one market and short in another market. For example, the investor may take Short June Wheat and Long June Pork Bellies.

Inter-Exchange Spread - This is any type of spread in which each position is created in different futures exchanges. For example, the investor may create a position in the Chicago Board of Trade (CBOT) and the London International Financial Futures and Options Exchange (LIFFE).

Trading Strategies.

Back to back swap strategy.

By Ira Kawaller | November 24, 2017.

This strategy that allows banks to add to their bottom line without inducing duration risk is also appropriate for money managers.

The future of fracking.

Harold Hamm, CEO of Continental Resources, recently had these words of advice for fellow American shale producers: “Save that money. Avoid selling that production in this poor market and wait for service costs to fall [further] before completing those wells.”

Is it time to hedge interest rate risk?

“By hedging now, companies are assured of protection if rates spike sooner than widely expected, while bearing only minimal cost.”

New storm potential for natural gas.

By Phil Flynn | August 12, 2014.

Natural gas regained the $4.00 for the first time since July 17 in the September contract. Some of the run up was on weather.

What opportunities will 400 million new energy users bring?

Infrastructure investment in India is a long-term theme, and is going to require a lot of raw materials and fuel sources. It's one thing to generate power; it's another thing to actually distribute that power.

Elliott Wave weekly wrap-up.

A look at the S&P 500, crude oil and gold markets.

Bullish or bearish you need to get risk/reward right.

Looking at examples of both bullish and bearish setups in gold we can see that options offer a trader superior risk management.

Trading system analysis: Then and now.

Trading system technology advanced quickly in the late 1980s and early 1990s, establishing paradigms that persist today. Here’s a look at where we stand — and where we might go.

10 rules successful traders follow.

By Jean Folger | November 25, 2013.

There are many ways to trade. Regardless of your approach, following these guidelines will put you ahead of the game.