"Selling commodity options is one of the most consistently profitable forms of trading available"
- Alan Parry
This is a very bold statement for anyone to make, but we will explain why we believe this to be true!
Probability of Success
Anyone that's been trading for a while -
whether that be Forex, CFD's, Spreads - dare we ask: "What is the probability of success (that you are right) once you have entered a trade..?"
Do you know the answer to this?
Presented here are some statistics for trading options… Note the statistic at the bottom - across 40 different commodities, with more than 17.6 million open options contracts, 85% of the options that expired, expired worthless!! That is a very significant number! Let me trace back from this date over the last four months and compile the same statistic for options expiries:
Note: These percentages are the percentage of options expiring worthless! Between 69% and 94% of all options over the last four months expired worthless (on average around 79%).
What does this mean for you as Trader?
If you were an option seller, then 8 out of every 10 trades you entered into over the last four months would have worked
in your favour!! If you carefully manage your trades, exiting when the loss equals the premium received then 6 out of 10
trades will make you a profit (two used to cover the losses on the remaining two trades). That is the basis for a very profitable
The casino always wins in the long run. Why? Because the probabilities are stacked (only slightly) in their favour. When selling options the probability of the option expiring worthless hugely favours the option seller!
Thus..- the business of trading in options has a very significant advantage - the probability of success
Question is HOW?
Almost all traders out there however probably have a very big question mark..- HOW?
- HOW do I know which market to look at (Corn, Wheat, Coffee, Gold)?
- HOW do I identify that option in the market that has the probability of expiring worthless?
- HOW do I know which strategy to follow given the market conditions (bull, bear, neutral, high volatility, etc.)?
- HOW do I visualize the RISK in this trade?
- HOW do I monitor the trade? HOW do I manage the trade? HOW do I adapt my strategy - my trading plan - as the market changes!?
- How, how, how...
While people such as Alan Parry would love to be that guide, it is impossible to be by everyone's side. However in our modern age there is no reason why not…
OptionsExplorer is a software guide that was created to fulfil exactly that role - to be the constant companion by your side that guides, teaches and assists you along the way in establishing a successful trading business. For many years the Matrix Plus assisted options sellers to make the right choices and now all that functionality and more is built into the OptionsExplorer.
OptionsExplorer offers various tools and methods to select the right market to trade in - you can approach this from the market side - determine the market volatility and the market direction and then search for options opportunities for the market, or you may start from the options side - ask the software to search through thousands upon thousands of options for those options that say have an 85% chance to expire worthless in the next 15 days but still yielding you at least $300 in premium, or any other parameters you choose.
Once identified, OptionsExplorer offers powerful tools to analyse that market, to identify the correct trading strategy and to visualize the underlying risk in the trading position. It has a myriad of built-in trading strategies for different market conditions, low-volatility - bear market, high volatility - neutral market, moderate volatility - non-neutral market, etc. etc. Strategies for beginner traders, advanced traders or master traders.
Based on the market conditions identified you may simply ask your companion to suggest a trading strategy, which you may then fine-tune to your liking. Or you may build your own strategy and view the profitability of the position and the underlying risk of the position on various graphs and charts. You may simulate price movements into the future to view the effect on your position and plan ahead, based on the underlying price movements. All the tables and graphs will update live with the changes that you make to your strategy.
Having created a trading strategy, we are able to save
such strategy, create any number of paper trading accounts and add the strategy to our paper trader. From here forward the software
will use live data to track the performance of your trading positions over time. The only difference between paper trading and live
trading will be that you actually place an order with your broker.
OptionsExplorer is a software application that captures the knowledge and experience of years of trading options and makes it
available to you. It provides a single source of all relevant options data and allows your to select a market, formulate and optimize
a trading strategy, plan and monitor your trades, etc. It provides you with all of the required information and tools that you will
require to build a successful trading business, trading Options on the Commodity Markets.
To learn more, you are welcome to visit and register on our trading forum, then post any questions on the forum...
- The live version of the software requires a daily data-download subscription from iVolatility containing all the options data. The current subscription for the data is $40 a month. Details will be provided on registration.
- The total package consists of the software itself, an introductory course on the commodity futures and options market, and a comprehensive introduction to the software functionality, from installation to building options trading strategies.
- The software functions off a relational database (MySQL Server), installed on your personal computer and updated on a daily basis. The software itself is Windows-based, Windows 8 or higher recommended (no Mac version yet)
- Your software developers are active live options traders themselves, the software is well supported, problems are speedily resolved and new features are continuously added to the software.
Intellectual property of OptionsExplorer is claimed by Alan Parry.
OptionsExplorer is programmed by Cecil Lourens.