Platinum call options give a buyer exposure to rising futures prices. Follow one contract from premium paid to its result at expiration.
How platinum options work
The examples use options on platinum futures. A call gives the right to enter a long futures position at the strike price. A put gives the right to enter a short futures position at that price.
An industrial user may buy platinum calls to manage purchase costs. Platinum exposure differs from gold because its demand has a larger industrial component.
The cost of one option
One NYMEX contract represents 50 troy ounces. At a premium of $40 per troy ounce, one option costs $2,000 ($40 × 50).
Assume the futures price and strike are both $1,000 per troy ounce. The call and put premiums are each $40 for comparison, not current quotes. Results below are at expiration, before fees, with any futures position from exercise immediately closed at the stated price.
Buying platinum calls
Suppose you expect platinum prices to rise and buy one $1,000 call for $2,000.
If the underlying future reaches $1,120 per troy ounce at expiration, buying at $1,000 gives an advantage of $120 per troy ounce. Across 50 units, that is $6,000. After the premium, your net profit is $4,000.
At $1,000 or below, the call expires worthless and the loss is $2,000. Breakeven is $1,040 per troy ounce: strike plus premium. At $1,020, the call has value but still loses $1,000 after its cost.
Before expiration
An option can be sold to close before expiration when a market is available. Its price then includes the effect of remaining time and implied volatility, so an earlier trade need not break even at the expiration price calculated above.
The purchased option can lose its whole premium. Exercise can create a futures position requiring margin and exposing you to further gains or losses. An uncovered seller can lose more than the premium received.
Platinum price chart
OANDA Platinum spot reference price. Spot prices differ from futures contract prices. Check the widget timestamp and market status; prices may be delayed.
