Exploiting relationships in metal futures

摘要

By comparing volatilities and valuations among futures options on gold, silver, copper and aluminum, we can see which markets are priced highest relative to their cash counterparts and glean ways to exploit those relationships in trading. Option values depend primarily on time and volatility -enough time for prices to vary and sufficient price volatility to make time worthwhile. Options on metal futures reflect these valuation principles. On a relative basis, the most valuable options are not necessarily those connected to the highest priced underlying assets, but given equal time to expiration, are those having the greatest volatility perceived by the market.