What is commodity options's hedging?
Commodity options's hedging refers to the act of holding two options with similar markets, the same quantity and opposite directions with physical objects as the subject matter; It also refers to the act of holding options and futures with similar market, the same quantity and the opposite direction with physical objects as the subject matter. Only by making profits in one direction can we make up for the losses in the other direction.
How does commodity options hedge?
When the call options held by 1 go bad, buy put options with the same theme and quantity.
2. When the put option goes badly, buy the same subject matter and the same number of call options.
3. When the trend of the futures contract varieties held is not good, buy call options with the contract varieties as the subject matter and the number as close as possible.
To sum up, commodity options is a way to reduce the possible losses or risks caused by another option investment. Suitable for investors who don't want to stop loss in the short term and want to control their own losses or risks.