Ideas for Soybeans Traders
By Joe Vaclavik
Broker, MF Global
The soybean market has seen unprecedented volatility throughout the past several months. In late February and early March all-time highs were made in both old crop and new crop bean contracts. The rally was due to variety of factors including a need for a massive increase in acreage as well as insatiable Chinese demand for US and South American oilseeds.
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The Commodity Cool Down: Why This May Be A Great Time to Buy!
By Stephen Salman
Commodity Trading Advisor/Branch Manager, Opportunities in Options
The Fed has been aggressively cutting rates to ensure the integrity of our economy and overt recession. The effort and ideology has certainly not gone unnoticed, however neither has the repercussions of the Fed’s actions. Every rate cut spun off victories and/or defeats for investors, depending on which camp their money was stationed.
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Outlook for Natural Gas
By Cynthia Kase, CMT, MFTA
President, Kase and Company, Inc. CTA
After a prolonged two year corrective phase, natural gas broke higher about six weeks ago, lagging crude’s bullish run by more than a year, and at this time, March 12, 2008, is roughly 10% of crude’s price. So the two pertinent questions are how high gas is expected to rise, and how to know when the run is over.
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Ideas for Trading Wheat
By Joe Vaclavik, MF Global
The wheat market has more than doubled previous all time highs in many contracts and continues to show strength despite the potential for huge global production in ’08. Hard Red Spring wheat, traded at the Minneapolis Grain Exchange, has seen a major shortage and has caused prices to skyrocket in upwards of $19 per bushel as a result. Chicago and Kansas City contracts have followed along; however have not seen the massive explosion in values that has been seen in the MGEX contracts. Before deciding which wheat contract to trade and what position to initiate, traders should be aware of why each specific contract moves and what the differences are between them.
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Essentials for New Futures Traders
By Ken Hughes, Senior Market Strategist, Lind-Waldock
If you are brand new to futures trading, it’s important to get educated about the markets. I will briefly outline some basic information you should know before you get started, but no matter how long you’ve been trading, your education should be ongoing. I think there are four essentials you must know before you begin trading and enter into a futures position: margin, point value, trading hours and expiration.
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The Greeks
By Matt Krupski
I’m going to give an overview of some terminology related to options you may have heard of, but may be Greek to you. Understanding the “Greeks” gives you a better understanding of how an options value changes over time, and that information may help you make better trading decisions. I’ll discuss four main Greeks: Delta, Gamma, Vega and Theta. There is one more, Rho, which relates changes in options values to changes in interest rates. I won’t get into detail about Rho as its effect on option prices is typically small and is the least important Greek for the average investor to understand.
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Forex, FX, Currency Futures: Making Sense of Market Choices
By Tim Evans
You may have heard the terms foreign exchange, forex, fx, and currencies used interchangeably. While all these terms essentially refer to the same thing—trading a nation’s currency rate against another’s—there are different types of markets available for traders wishing to hedge or speculate. Some are regulated, some are not, and all offer unique characteristics depending on your individual strategy and risk tolerance. I’ll go over some of the basics first, and why you might consider one over the other.
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Coping With Volatile Markets, and Using Options Strategies
By Matt Krupski
This summer’s volatility in financial and commodity futures markets has even caught the attention of people who don't regularly follow the financial pages. I've had countless people ask me amid the ups and downs: "What's going on in the markets?" I have some general rules for traders that are good to follow in any market, but even more so in these volatile times. And, I'll offer some options trading strategies to consider if you want to hedge or augment your portfolio if the stock market takes another turn for the worse, using examples in the S&P 500 futures.
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Pick Price Levels With Fibonacci Retracement
By Christy Olin
One of the toughest parts of trading in futures—and in equity
markets for that matter—is choosing entry and exit points.
Fundamental and technical analysis of the markets can aid in
determining market direction, while one technical study in
particular (Fibonacci Retracement Lines) can be helpful in
picking price levels for getting into the market and placing
stop losses after a particular channel has established a
near-term high and low. Fibonacci Retracement is a
mathematical equation—representing most commonly 38.2%, 50%, and
61.8% of a price trend in a futures market. These levels are
considered strong levels of support or resistance in the market,
and typical levels for a correction of a long-term,
well-established trend. A move straight up or down is rare in
any market; the Fibonacci Lines are ways to better determine
entry points into a market.
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Gold Futures Sustain Head and Shoulder Reversal
By Christy Olin
The gold futures market has recently created a textbook example
of an Inverse Head and Shoulders pattern, leading technical
traders to believe the market will continue higher. The
fundamentals for this market appear to point to higher prices as
well. Thisarticle will look at the definition of an Inverse
Head and Shoulders pattern and what this means in conjunction
with fundamental analysis for the gold futures market.
An Inverse Head and Shoulders is a bullish formation, according
to classic technical analysis. It requires four parts, the left
shoulder, the head, the right shoulder, and then continued
confirmation of the break to the upside. First a market trades
downward to make a near-term low, or the left shoulder. Then the
market corrects for a time before trading down and violating
that previous low, creating a new near-term low, or the head.
The market corrects again, usually for about the same period of
time, before trading lower again.
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Advantages of Commodity Options Over
Stock Options
By Edward F. Carr
Fundamentally commodity options work the same as stock options.
Both give the buyer the right but not the obligation to purchase
or sell at a pre-determined price during a pre-determined time
frame. However, inherent in commodity options are numerous
advantages, the main ones being: margin, diversification,
implementation of strategies and fairer pricing.
The commodity markets utilize SPAN*, Standardized Portfolio
Analysis of Risk. SPAN is a risk based, portfolio approach for
calculating margin requirements in an account for futures and
options on futures. Formulated by the Chicago Mercantile
Exchange, instead of calculating the margin on a new position
placed in an account, SPAN calculates the effect the new
position has on the entire account. In other words, it
recalculates the portfolio as a whole.
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The More Versatile, The Better
By Tim Evans of Lind-Waldock
