Making money in futures trading hinges upon how well you walk the fine line between risk and reward. On paper, it sounds easy ― simply cut off losers and let winners ride ― right? Well, as any veteran of the markets will tell you, trade management may be the single most challenging aspect of active… Read more.
Are the Futures Markets Efficient?
According to the Efficient Market Hypothesis (EMH), the financial markets are methodical systems specializing in the valuation of assets. Under EMH, the current price of a security is a reflection of all available and relevant information. Supporters of the theory believe asset pricing is a product of random walk functionality, with the market being “always right.”… Read more.
Shifting Your Technical Analysis into Overdrive
Today’s traders have come to realize that online trading revolves around two crucial issues – execution and analysis.
Trading Option Spreads, While Fading Time Decay
Commodity option contracts are decaying assets. Unlike futures contracts from which they are a derivative, option contract values are lost each day to time decay. Therefore, it is prudent to liquidate long option positions even if the target price is not yet realized before time value diminishes the premium.
Two Bullish Corn Charts in a Bearish Market
As a reader of TWIG, I hope you have come to understand my major objective to inspire ideas so you can hedge or trade these grains markets on your terms. Lately, I have been asked by producers why it would make sense to re-own. Today, I am going to step out of my bear costume and put on my bulls jersey. Maybe I can inspire an idea or two to get you involved.
Do You Understand Option Expiration, Exercising, and Assignment? Now You Will.
It is essential to understand option expiration, exercising, and assignment as a commodity option trader. Know these principles, whether purchasing outright calls or puts, selling or “writing” option contracts, or using complex option spread strategies. Not only will you be better equipped for such events, but also having this acumen could potentially improve your trading performance.
Get Ready For the Holidays With a Christmas Tree Spread
Learn a different way to combine options to take a specific idea and put it into action.
Option Strategies for Futures Traders: #2 Straddle
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.
Option Strategies for Futures Traders: #1 Option Tree
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.
A Real Life Example of How Futures Spreads Reduce Market Volatility
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.
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