January 30th, 2015 - Issue #772
In This Issue
1. Options on Futures: Options 101
2. Hot Market report: Commodities Sector Finding Support?
3. Economic Calendar
1. Options on Futures: Options 101
Table of Contents
4 Introduction
6 Part One: The Vocabulary of Options Trading
10 Part Two: The Arithmetic of Option Premiums
10 Intrinsic Value
10 Time Value
12 Part Three: The Mechanics of Buying and Writing
Options
12 Commission Charges
13 Leverage
13 The First Step: Calculate the Break-Even Price
15 Factors Affecting the Choice of an Option
18 After You Buy an Option: What Then?
21 Who Writes Options and Why
22 Risk Caution
23 Part Four: A Pre-Investment Checklist
25 NFA Information and Resources
To access Options on Futures: Options 101, please fill out this form.
Cannon Trading respects your privacy and will never give this information to a 3rd party.2. Hot Market Report - Commodities Sector Finding Support?
From our friend Jim Wyckoff
Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at www.jimwyckoff.com click on image below to enlarge
The Goldman Sachs Commodity Index (GSCI) is a basket of several raw commodity futures prices rolled into one composite index price. It's a good gauge of the overall health of the raw commodity sector. See on the daily bar chart that the GSCI is in a solid price downtrend and has just this week hit a six-year low. The raw commodity bears remain in firm technical command. See at the bottom of the chart that the Directional Movement Index (DMI) has a green ADX line reading of 56.33. Any ADX line reading above 30.00 suggests a powerful price trend is occurring. However, there is one ray of hope for the raw commodity bulls. The ADX line is showing bullish divergence. See that the ADX line has lost strength and is trending lower, at the same time the GSCI hit a new low. This is one early clue that the GSCI has or is close to putting in a major bottom.
3. Economic Calendar
Source: Moore Research Center, Inc.
| Date | Reports | Expiration & Notice Dates |
| 02/02 Mon |
7:30 AM CST - Personal Income & Spending(Dec) 7:30 AM CST - PCE Prices-Core(Dec) 9:00 AM CST - ISM Index(Jan) 9:00 AM CST - Construction Spending(Dec) |
|
| 02/03 Tues |
9:00 AM CST - Factory Orders(Dec) 1:00 PM CST - Auto & Truck Sales(Jan) |
FN: Feb RBOB & ULSD(NYM) LT: Jan Butter(CME) Jan Milk(CME) Jan Butter Options(CME) Jan Milk Options(CME) |
| 02/04 Wed |
6:00 AM CST - MBA Mortgage Purchase Index 7:15 AM CST - ADP Employment Change(Jan) 9:00 AM CST - ISM Services(Jan) 9:30 AM CST - API & DOE Energy Stats 2:00 PM CST - Dairy Products Sales |
|
| 02/05 Thurs |
6:30 AM CST - Challenger Job Cuts(Jan) 7:30 AM CST - USDA Weekly Export Sales 7:30 AM CST - Initial Claims-Weekly 7:30 AM CST - Trade Balance(Dec) 7:30 AM CST - Productivity-Prel(Q4) 7:30 AM CST - Unit Labor Costs(Q4) 9:30 AM CST - EIA Gas Storage 3:30 PM CST - Money Supply |
|
| 02/06 Fri |
7:30 AM CST - Nonfarm Payrolls(Jan) 7:30 AM CST - Unemployment Rate(Jan) 7:30 AM CST - Hourly Earnings & Ave Workweek(Jan) 2:00 PM CST - Consumer Credit(Dec) |
LT: Feb Canadian Dollar Options(CME) Feb Currencies Options(CME) Feb US Dollar Index Options(ICE) Feb Live Cattle Options(CME) Mar Cotton Options(ICE) Mar Cocoa Options(ICE) |
| 02/09 Mon |
|
FN: Feb Live Cattle(CME) LT: Mar Sugar-16(ICE) |
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!
