I’ve been thinking of trying options on Futures. I currently make around 80% – 100% per year return on options on stocks. I usually use a calendar spread on stocks (ie long 2 yr or so. LEAP, right now Jan2009 and selling close (Jan2007) in calls but at a higher strike so that I am profitable if called)
So, let’s say I buy a call on 1300 silver at Decembe 2007 for $12205 or 2.44 pr oz.(today’s price) . So, by my understanding, I’d have to sell at least 1550 calls. Feb 2007 are 915 or .18c per onze. Is the way I am working it corect?
Also, if I’m called out of the Feb 2007 1550 by chance if silver rises to that price, will I perhaps need to deliver silver, or will I have a chance to exercise my 1300. Or, finally are 1550 silver and 1300 silver so different that a 1300 can’t cover a 1550. Those might be weird questions, but I want to understand how much my knowledge of stock options really play into the futures world.
How would this strategy work on futures? I’ll use examples: