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Commodity Trading Strategy – Currency Spreads, Carry Trading and Commodity Options Trading

Options trading is highly profitable when done correctly. Option contracts can be written for many different assets such as commodities and currencies. These markets can be traded in two ways: by spot trading and using options. Many currencies and commodities, like gold and copper, have a close relationship. If you see that there are no correlations between the currencies and commodities, then this is an option trading strategy to use. If you want to learn a very powerful trading strategy that brings a lot of profit, you should know about unusual options activity

South Africa exports the most gold in the entire world. Rand and gold are closely linked on the global market. The spread between RAND gold price and the gold market is often unusually large.

You can also buy options if you see the spread widen between Australian Dollars and Gold. It will be out of line with what it has been historically. The spread between the Australian Dollar and Reuters Commodity Index can be traded when it widens. Reuters Index Commodity is a helpful index which shows commodity prices in general. The spread should be wider than it was in the past and expected to return to its normal level.

You may have heard of the concept. You can try it too. You can do it too. Carry trading has been mastered by hedge funds. Carry Trading is one of their most popular trading strategies. Nobody wants their money just sitting there without any returns. Carry trade is a great way to capitalize on the difference between interest rates of two currencies. Find a currency pair where one currency has a high interest rate compared to another. You sell the low rate currency to buy the one with a high rate.