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Middle Tennessee | I'm long wheat and want to stay that way. What's bugging me, and some of you guys too, is the dollar deal. That got me to thinking, why not try a trade with the trend for the first time in my life?
One of you guys recently posted the weekly dollar-index chart, noting that Friday's trade was bumping up against a trend line. Well, it looks like it made it with the power close.
So, the high mid 2010 was 89.1, it's at 86.8 today. It looks like 89 December calls gained 0.15 x $1k, with a price of 0.295 x $1k. There are 62 days until expiration. I have approximately zero experience with options, but by looking at strikes at the money, it looks like if the Dec. contract made it to 89 very quickly (I suppose it probably will not), the call would appreciate from $295 to $750. I don't know how to consider the time erosion if price makes it to the 89 strike, but at a date nearer to expiration.
http://www.barchart.com/commodityfutures/US_Dollar_Index_Futures/op...
My hunch is that you guys who know about these things will tell me: buy a March call, or something with more premium. I'd almost rather try a straight futures, maybe wait to for setback into Thursday's range, 85.8 or 85.9. Of course, we'll probably get a gapper tomorrow night, and slim chance at that opportunity. Anyway, if I'm gonna spend a grand on an option, I'd almost rather just buy a futures.
What do you guys think? Am I too late to the party? If not, what's the best way to get in the door?
Edited by LongKC 10/4/2014 19:23
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Does A Dollar Call Make Sense?
