Most traders, in both the stock and commodities markets, are familiar with the concept of the VIX volatility index, but they habitually overlook the unique characteristics of the futures contract. Unfortunately, this innocent lack of preparation can result in expensive trading lessons. Join us on May 31st to discuss the do’s and don’ts of VIX futures trading!
The answer to that question is a resounding “no”! Fed Funds futures contracts are simply trading vehicles in which hedgers, but mostly speculators, buy and sell according to their market outlook. Although it can be argued that the Fed has been looking to the financial markets for policy guidance, in the end, they are the decision makers. Fed Fund futures market participants are merely making educated guesses as to what the Fed might do. Accordingly, the current value of the Fed Funds futures contracts reflects market participants’ expectation of future overnight lending rates, it does not reflect the actual probabilities of changes in monetary policy based on the opinions of Federal Open Market Committee (FOMC) members (AKA the decision makers). While most traders of Fed Funds futures are highly sophisticated, it is important to recognize they can be, and often are, wrong.Read More
The price of oil has defied the expectations of many, but now that the masses are jumping on the bullish bandwagon the market is likely reaching a near-term inflection point. Specifically, we have our eye on the Commodity Futures Trading Commission (CFTC) Commitments of Traders Report (COT); according to the report, large speculators have amassed roughly 340,000 net long contracts and over 400,000 if you count the positions of options traders. Such levels have provoked market reversals in the past simply because the buying power dries up; I suspect that is what is in store for the oil market in the coming weeks.Read More
After posting one of the largest monthly gold futures rallies seen in several years, the precious metal has been confined to consolidation. During this time, the price of gold has been as high as 113,280 and as low as 113,200, which has surely been enough volatility to scare out weak handed bulls, and shake out the feeble bears. Unfortunately, pain on both sides of the trade is necessary for true price discovery. Nevertheless, once the dust settles there will likely be a breakout; conventional wisdom says that breakout will be to the upside.Read More
Jim Cramer, host of CNBC's Mad Money frequently consults with Carley Garner, commodity broker and futures market analyst, for an opinion on the direction of the commodity markets.Read More
Unfortunately, our propensity toward the familiar often holds us back and I feel this is even more true in regards to the world of trading. Despite the human tendency to gravitate to the norm, I would like to challenge your perception of the markets and the way you approach price speculation. Perhaps thinking outside of the box will lead you into alternative arenas and improve the efficiency of your trading ventures.
The futures markets often get a "bad rap" by the investment community thanks to horror stories in regards to traders losing their house along with their shirt. However, losses are possible in any market. It doesn't seem fair to blame the trading venue, the blame might lie with the participants themselves. That said, there are certainly more temptations in the futures markets than in most other arenas.Read More
It seems like an eternity has passed since the last agricultural bull market. From early 2010 through spring of 2012, corn prices more than doubled in value; in the same time frame soybeans and wheat made similarly miraculous moves; yet, since then the agricultural commodities have been sucked into the never-ending downward commodity spiral. However, the beauty of the agricultural markets is they are a renewable commodity in which supply and demand fundamentals can alter dramatically between crop cycles; and if Mother Nature has anything to say about it, they can change from season to season, or even weather pattern, to weather pattern.Read More
Is King Dollar getting demoted?
Since late 2014, the greenback has been the “talk of the town”. In addition to dollar strength choking corporate earnings, it has played a big part in a commodity decline of historical proportion. As a commodity broker, with a front row seat to the chaos, I can attest the currency market is perhaps the single most influential driver of asset prices. The correlations between the dollar and other assets is real, and shouldn’t be overlooked. Before speculating in stocks, commodities, or even bonds; one must be aware of the currency market landscape.Read More
Although it requires great patience and discipline, and comes with elevated risks, nothing captures the opportunity of volatility quite like option trading. The highest probability trades are often made possible by sudden spikes in volatility. In this class we will discuss the practice of constructing and using volatility strategies. Some of the topics discussed will include:Read More
Lately, it seemed to Jim Cramer that the crazy linkage between oil and stocks would last forever. Whenever oil would go up, the market would rally; whenever oil went down, stocks were crushed.
"That is lunacy, as I've said repeatedly, because the vast, vast majority of companies in the S&P actually benefit from cheaper crude." ~ Jim Cramer
I’ve been a commodity broker since 2004. Throughout that time we’ve seen massive shifts in the manner retail traders execute orders in the futures and options markets, but more importantly we’ve seen transaction costs plummet due to massive improvements in execution efficiency.Read More
The practice of option selling is a controversial strategy for commodity option traders to partake in. Many brokerage firms outright forbid the practice; others allow it, but there are often strings attached. However, there are a limited number of brokerage services that recognize despite the challenges of option selling, it likely offers the highest long-term prospects for successful trading. Accordingly, such brokers give their clients the freedom to implement a short option strategy. We are a part of the minority commodity brokers that believe our clients should be given the opportunity to sell options without hassle. Nevertheless, option selling is far from an “easy-money” venture; there is a reason many brokerage firms shy away from option selling.Read More
Nevertheless, there are some compelling arguments to suggest that option sellers face favorable odds of success over option buyers, or outright futures traders. But, even putting the odds in your favor doesn’t guarantee a favorable outcome. Here are some aspects of option selling that should be considered before employing a premium collection strategy.Read More