Zinc Options Explained

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Contents

Zinc Options Explained

Zinc options are option contracts in which the underlying asset is a zinc futures contract.

The holder of a zinc option possesses the right (but not the obligation) to assume a long position (in the case of a call option) or a short position (in the case of a put option) in the underlying zinc futures at the strike price.

This right will cease to exist when the option expire after market close on expiration date.

Zinc Option Exchanges

Zinc option contracts are available for trading at London Metal Exchange (LME).

LME Zinc option prices are quoted in dollars and cents per metric ton and their underlying futures are traded in lots of 25 tonnes (55116 pounds) of zinc.

Exchange & Product Name Underlying Contract Size Exercise Style Option Price Quotes
LME Zinc Options 25 ton
(Full Contract Specs)
American N.A.

Call and Put Options

Options are divided into two classes – calls and puts. Zinc call options are purchased by traders who are bullish about zinc prices. Traders who believe that zinc prices will fall can buy zinc put options instead.

Buying calls or puts is not the only way to trade options. Option selling is a popular strategy used by many professional option traders. More complex option trading strategies, also known as spreads, can also be constructed by simultaneously buying and selling options.

Zinc Options vs. Zinc Futures

Additional Leverage

Limit Potential Losses

As zinc options only grant the right but not the obligation to assume the underlying zinc futures position, potential losses are limited to only the premium paid to purchase the option.

Flexibility

Using options alone, or in combination with futures, a wide range of strategies can be implemented to cater to specific risk profile, investment time horizon, cost consideration and outlook on underlying volatility.

Time Decay

Options have a limited lifespan and are subjected to the effects of time decay. The value of a zinc option, specifically the time value, gets eroded away as time passes. However, since trading is a zero sum game, time decay can be turned into an ally if one choose to be a seller of options instead of buying them.

Learn More About Zinc Futures & Options Trading

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Writing Puts to Purchase Stocks

If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount. [Read on. ]

What are Binary Options and How to Trade Them?

Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time. [Read on. ]

Investing in Growth Stocks using LEAPS® options

If you are investing the Peter Lynch style, trying to predict the next multi-bagger, then you would want to find out more about LEAPS® and why I consider them to be a great option for investing in the next Microsoft®. [Read on. ]

Effect of Dividends on Option Pricing

Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date. [Read on. ]

Bull Call Spread: An Alternative to the Covered Call

As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative. [Read on. ]

Dividend Capture using Covered Calls

Some stocks pay generous dividends every quarter. You qualify for the dividend if you are holding on the shares before the ex-dividend date. [Read on. ]

Leverage using Calls, Not Margin Calls

To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin. [Read on. ]

Day Trading using Options

Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading. [Read on. ]

What is the Put Call Ratio and How to Use It

Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator. [Read on. ]

Understanding Put-Call Parity

Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969. It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa. [Read on. ]

Understanding the Greeks

In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions. They are known as “the greeks”. [Read on. ]

Valuing Common Stock using Discounted Cash Flow Analysis

Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow. [Read on. ]

7 Common Types of Zinc Explained

Health Information You Can Trust

We pride ourselves on being your source for the best, scientifically-accurate advice for healthy living.

This article contains references to scientific journals and peer-reviewed research. The numbers in brackets correspond with the list of references at the end of the article.

Reviewed and Approved

Additionally, the Reviewed and Approved seal signifies that our scientific board of experts has double-checked this article for accuracy. You can feel confident in knowing that the information within this article is sound.

Zinc is an essential mineral that contributes to our total physical and mental well-being. It is a key player in the optimal functioning of the reproductive organs, and an important element involved in basic cellular function. Zinc also strengthens the human immune system and deters common skin conditions. It acts as a cofactor with more than 300 different enzymes, boosting the functioning of many of the body’s most basic chemical processes.

Types of Zinc

Zinc is not easily absorbed in the body unless first attached to another substance. For this reason, many zinc manufacturers have “chelated” zinc to amino acids. Supplemental zinc is also available in the inorganic and non-chelated form — usually called zinc sulfate or zinc oxide.

1. Chelated Zinc

This form of zinc has undergone a process called chelation, whereby the organic molecules have been given an electrical charge that allows them to positively attract the charged mineral (in this case zinc). This creates a temporary increase in the complexity and concentration of the mineral within the molecule.

In other words, each molecule packs more concentrations of zinc via a process of attaching the mineral to something else, such as an amino acid. The belief is that this helps the body better absorb the mineral. There is much debate as to whether the process increases absorption. Dr. Gabe Mirkin from the Baylor University School of Medicine feels that chelating minerals has an insignificant effect on absorption when compared to the general conditions in the digestive system.

2. Zinc Orotate

Zinc orotate is zinc that has been chelated to orotic acid. The human body’s cellular membranes readily absorb this type of zinc. Research from Dr. Hans Nieper has found that orotate forms of zinc were more neutrally charged, as compared to other types of zinc. This allowed them to pass through the membranes of cells easily, leading to higher tissue concentrations of zinc. Zinc orotates contain many antioxidant properties that can protect your health while offering your cells the most readily-absorbable form of zinc on the market today.

3. Zinc Picolinate

A form of zinc that has been chelated to picolinic amino acids.

4. Zinc Gluconate

One of the most popular forms of dietary zinc, zinc gluconate is created by fermenting glucose. It produces a supplemental product with an extremely long shelf-life. Unfortunately, gluconate supplements are just a chemical substitute for actual zinc.

The body absorbs very little of this processed form, as the bioavailability of these chemicals is virtually none.

5. Zinc Acetate

Another chemically-altered form of zinc, acetates are considered to be more absorbable than gluconate. This form of zinc, also known as zinc salt dihydrate and zinc diacetate, is created by adding acetic acid to zinc carbonate or zinc metal. I would not recommend this form of zinc although this form can aid in reducing the duration of the common cold, as well as offer relief for Wilson’s disease, a genetic disorder whereby the body stores toxic levels of copper.

6. Zinc Oxide

This inorganic compound of zinc is most commonly used in topical ointments for addressing minor skin conditions such as burns and irritation. It is also a common ingredient in sunscreens. This type is a non-chelated, inorganic form of zinc. The results are mixed on if the body can absorb and metabolize this form of inorganic zinc.

7. Zinc Sulfate

Water-soluble and non-chelated, this is an inorganic form of zinc, and the results are mixed on if the body can absorb and metabolize it.

Taking a Zinc Supplement

Zinc is an essential mineral for human life, and it provides numerous health benefits, from the immune system to boosting testosterone. There are many types of zinc, but for supplementation, I recommend a product that contains plant-based zinc like Global Healing’s liquid Zinc.

When you take zinc in a natural plant-based form, it’s chelated to natural elements, which enhances the ability of your body to absorb it as it would zinc from a food source — because that’s what it is.

†Results may vary. Information and statements made are for education purposes and are not intended to replace the advice of your doctor. If you have a severe medical condition or health concern, see your physician.

Zinc Options Explained

Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969. It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa. Support for this pricing relationship is based upon the argument that arbitrage opportunities would materialize if there is a divergence between the value of calls and puts. Arbitrageurs would come in to make profitable, riskless trades until the put-call parity is restored.

To begin understanding how the put-call parity is established, let’s first take a look at two portfolios, A and B. Portfolio A consists of a european call option and cash equal to the number of shares covered by the call option multiplied by the call’s striking price. Portfolio B consist of a european put option and the underlying asset. Note that equity options are used in this example.

Portfolio A = Call + Cash, where Cash = Call Strike Price

Portfolio B = Put + Underlying Asset

It can be observed from the diagrams above that the expiration values of the two portfolios are the same.

Call + Cash = Put + Underlying Asset

Eg. JUL 25 Call + $2500 = JUL 25 Put + 100 XYZ Stock

If the two portfolios have the same expiration value, then they must have the same present value. Otherwise, an arbitrage trader can go long on the undervalued portfolio and short the overvalued portfolio to make a riskfree profit on expiration day. Hence, taking into account the need to calculate the present value of the cash component using a suitable risk-free interest rate, we have the following price equality:

Put-Call Parity and American Options

Since American style options allow early exercise, put-call parity will not hold for American options unless they are held to expiration. Early exercise will result in a departure in the present values of the two portfolios.

Validating Option Pricing Models

The put-call parity provides a simple test of option pricing models. Any pricing model that produces option prices which violate the put-call parity is considered flawed.

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Continue Reading.

Buying Straddles into Earnings

Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results. [Read on. ]

Writing Puts to Purchase Stocks

If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount. [Read on. ]

What are Binary Options and How to Trade Them?

Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time. [Read on. ]

Investing in Growth Stocks using LEAPS® options

If you are investing the Peter Lynch style, trying to predict the next multi-bagger, then you would want to find out more about LEAPS® and why I consider them to be a great option for investing in the next Microsoft®. [Read on. ]

Effect of Dividends on Option Pricing

Cash dividends issued by stocks have big impact on their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date. [Read on. ]

Bull Call Spread: An Alternative to the Covered Call

As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative. [Read on. ]

Dividend Capture using Covered Calls

Some stocks pay generous dividends every quarter. You qualify for the dividend if you are holding on the shares before the ex-dividend date. [Read on. ]

Leverage using Calls, Not Margin Calls

To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin. [Read on. ]

Day Trading using Options

Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading. [Read on. ]

What is the Put Call Ratio and How to Use It

Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator. [Read on. ]

Understanding Put-Call Parity

Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969. It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa. [Read on. ]

Understanding the Greeks

In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions. They are known as “the greeks”. [Read on. ]

Valuing Common Stock using Discounted Cash Flow Analysis

Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow. [Read on. ]

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  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

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