Gold’s miserable performance on Monday showed just how difficult it would be for the June Gold Futures Contract to break the $1300 level. Its difficulty can be compared to Bartolo Colon’s attempt to hit a Home Run. While June, 2016 Gold has not had a closing price above $1300 in substantially more than a year, or approximately 250 Trading Days, Bartolo Colon, in 249 Plate Appearances and 228 At Bats, has finally hit a home run.
For many Options Traders, analyzing statistics is the root of their interest in Trading Options. For those who love sports, analyzing statistics is an equal fascination. Therefore, it is not surprising that the number of Options market-makers who are interested in sports and sports statistics is incredibly high. If you are a sports fan who loves statistics, learn more about Options Trading with this PDF.
If there were Traders in the Options Trading Pits, as there were less than six years ago, (like the movie Trading Places), you can be sure that there would be a market for the Bartolo Colon 2nd Home Run Calls. Options Traders would price, as a lark, the likelihood that Bartolo Colon would hit his second Home Run in a certain number of At Bats (that would be the Strike Price). If Colon, for example, hit his second Home Run in 100 At Bats or less, the pay-off would be the premium paid, minus the number of At Bats he hit it in (not exactly the structure of a Call). For example, if I paid 5 dollars for the right to get paid on Colon’s hitting a Home Run in less than 100 At Bats and he hit it in 15 At Bats, I would get paid $100, the Strike Price, minus the 15 At Bats, or $85, less the premium I paid or $5. For my $5 Purchase Price of the Call I would net $80.
In the old days of Trading Floors, where customers traded in an open-outcry environment rather than with computers and algorithms, good natured markets in push-ups, a person’s weight, and March Madness were made all of the time. It wasn’t that the traders were necessarily gamblers it was that they all felt confident in their ability to analyze statistics and get a competitive edge. The Options Markets provide the opportunity to do this on a daily basis. If you are Trading Options and can also give me a market on the Bartolo Colon 250 At Bat Home Run Calls as Structured above, then you are likely to be pretty good at assessing the value of Listed Options. Our Syllabus provides an opportunity to see where you stand on Options Trading Knowledge.
The Bartolo Colon 250 Calls may never come to fruition, because he’s not likely to play for 250 more At Bats. Expiration occurs at his retirement date however, as the owner of the Call you have a special rooting interest each and every at At Bat. While there are many traders around the globe pulling for June Gold to Settle above $1300 an ounce and continue higher, its price may not generate the personal interest and inspiration that the forty-two year old Colon provided this weekend. For statisticians and sports lovers alike, Bartolo Colon has proven that sports provides a combination of youthful exuberance and the love of basic math. Options Trading certainly provides the latter.
Options trading involves significant risk and is not suitable for every investor. The information is obtained from sources believed to be reliable, but is in no way guaranteed. Past results are not indicative of future results.
