Platinum options let a buyer take a view on price changes while paying a premium for a limited period. A call offers exposure to a rise; a put offers exposure to a fall. The size of the move and the premium determine whether the buyer makes money.
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.
Buying platinum puts
If you expect prices to fall instead, buying one $1,000 put costs $2,000 in this example.
At a futures price of $880 per troy ounce, selling at the strike gives an advantage of $120 per troy ounce. The option is worth $6,000 at expiration, leaving a $4,000 net profit after the premium.
At $1,000 or above, the put expires worthless. Breakeven is $960 per troy ounce. At $980, the price has fallen, but the put still loses $1,000: the move has not covered its premium.
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.
