The recent break in the grain markets has had my phone ringing with producers and speculators alike, clamoring for a plan to handle what they perceive to be a confusing market. For the first time in two months, I could feel some panic coming from those who are long the markets. Many are fretting they… Read More.
It is extremely difficult to look at a chart and see how your option position will react between entry and expiration. Charts will tell us everything a market has done up to the minute, but you are ultimately living up to the “hard right edge” of that chart. Risk graphs provide the option trader with… Read More.
Entrepreneurship, to me, is the perfect concept for the retail trader and investor to consider before committing time and capital in the futures markets. The terms trader and entrepreneur are synonymous and are used interchangeably in this article. Noted Austrian Economist and recently fancied proponent of the free market, Murray Rothbard eloquently explains: “Entrepreneurship [in… Read More.
Volatility plays a significant role in the pricing of options. As traders, we must understand and pay close attention to a market’s volatility as we build our option strategies. When we see extreme volatility in a market, we feel an overwhelming sense of uncertainty. The normal psyche of a trader is to react emotionally as… Read More.
This is a sample entry from Craig Turner’s weekly market analysis newsletter, Turner’s Take, published on August 29, 2012. We have an interesting opportunity in a Corn futures butterfly spread this morning. For those of you who are not up to speed on futures butterfly spreads, please read this Daniels Trading blog article written by… Read More.
We have covered the option tree strategy in the previous post. In the spirit of the campaign season, I had the readers decide which strategy I should cover next. Per the poll results, with forty-four percent of the votes, I present a review of long and short option straddles. Please keep in mind that we… Read More.
If you are a “writer” of commodity options, you inherently have exposed and unlimited risk. However, it’s this risk potential that provides the capacity to reap rewards. Therefore, a savvy commodity option writer understands that managing risk is more important than reaping rewards. The trade setup below details a strategy to help protect short option… Read More.
There are various exotic option strategies with different objectives and theoretical scenarios. I’m going to walk you through the basics in detail, while keeping these complex instruments as simple as possible! In addition, over the next few weeks, we will cover a few prime options strategies for futures traders that benefit from the leverage and… Read More.
Let’s talk about a phrase we like to call Seller’s Remorse. You may be asking, “What is it and how does it happen?” We will answer that question in greater depth later on, but it is more important to know how it can be avoided! Seller’s Remorse is the feeling you get after making a… Read More.
Recently, I had a number of clients involved in a futures spread in the live cattle market. The idea behind the trade was to get long the cattle market heading into the summer by buying in the front month and selling in the back month – specifically, they were buying June Live Cattle and simultaneously… Read More.