Consolidating information in option transactions

There are two keys—one technical and the other option related—to implementing a “non-directional” option trade, like a straddle or a strangle: (1) Identifying areas of consolidation on the chart, and (2) low volatility for the options.

Think of price consolidation like a spring being compressed.

If the consolidation turns into a flat-lining chart, you should consider closing the trade and moving on.

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For investors who use options, profits may be possible without having to correctly guess the direction of the next move. presidential election, worries over the economy, and the possibility of rising interest rates, it’s not a surprise to see gold moving back and forth as it has been over the past several months.The put option lost , but the call more than made up for that with a profit of , for a net profit of times the contract size, or 00.That’s a 71% return on the initial investment of 00.People come to Quick Books Learn & Support for help and answers—we want to let them know that we're here to listen and share our knowledge.

We do that with the style and format of our responses.

But with a sizable move, the winning option can sometimes outpace the losses of the other contract, resulting in a net win.

Here is an example using options on CME Group's COMEX gold futures, which have a contract size of 100 troy ounces.

Management Reporter lets you create consolidated financial reports across legal entities, use Microsoft Excel to import consolidation data from other sources, and translate amounts into any number of reporting currencies without having to run the consolidation process in Microsoft Dynamics AX.

For more information about how to consolidate transactions by using Management Reporter, see Financial consolidations and currency translation.

Selecting a trade that’s closer to expiration harnesses something called “.” It’s what gives the “winning” option the ability not just to cover the losing option, but also to generate an overall profit.