Financial markets, ie commodities as well as stock market had risen up too fast and too high. In my view, not high enough to short sell, and not low enough to buy. So selling options is the best strategy, getting paid while waiting for better opportunities.
1. Sold 1 lot of Nickel Call option $52,000 Apr 07, premium for 1 lot of nickel is USD4,320, margin required is USD25,500, so yield is 16% in just 2 weeks time. Expiration of option is on 4 Apr 07.
In the senario that nickel price goes up, and my options get exercised, I'll have a short position of Nickel futures at $52,000. I think shorting at $52,000 is a good level.
2. Sold Aluminum call option $2850 Apr 07, premium for 2 lot of Aluminum is USD700, margin required is USD4,950/lot , so yield is 7% in just 2 weeks time. Expiration of option is on 4 Apr 07.
In the senario that aluminum price goes up, and my options get exercised, I'll have a short position of aluminum futures at $2850. I think shorting aluminum at $2850 is a good level. Aluminum is still trading at the range of $2900 to $2600.
For the chart of the nickel and aluminum: