Economic Trading

Category Archives: Economic Trading


Interest Rate Futures, Real Estate and Mortgage Rates

July 17th, 2019 Filed under Economic Trading, Financial Futures, Futures Broker, Futures Trading | Comment (0)

By John Thorpe, Senior Broker

 

Over the course of the last 45 years, whether you own a small monopoly of commercial buildings or a condo on Oak street U.S.A. your investments are subjected to the actions of the Federal Reserve Bank.

 

The Federal Reserve Bank seeks to provide stability in the largest world economy through interest rate regulation. Its mandate is to use financial tools to satisfy two congressional mandates, 1: Full Employment and 2: Moderate Inflation to a 2% annualized rate; Move too far too fast in any direction with policy shifts and financial perils for all! may be in the offing. The economy could move too fast in the wrong direction or too fast in the right direction which can lead to an overheating and a bursting of an economic bubble. Look no further than Savings and Loan crisis in the 1980’s and 90’s, the Japanese housing market collapse in 1989 (Japan is currently still struggling with a zero interest rate environment 30 years later) the Dot Com bubble after Y2K and most recently , the housing market collapse, which began with the bankruptcy of Iceland, no one paid attention, then the bankruptcy of Ireland, again, no one paid attention, then the bankruptcy of Bear Stearns,  some paid attention  (what did any of these entities have to do with the value of our homes, we thought) then Lehman brothers collapsed in September of 2008 and everyone paid attention as our home prices collapsed.

Use Google, DuckDuckGo, Bing or any of your favorite search engines and type in

10 yr. correlation with mortgage rates

 

You will find search pages full of information about the importance of interest rate policy and its effect on mortgage rates, specifically the Fedfunds rate.

 

 

Whether you have a 30 yr fixed, a 15 yr fixed or a 5/1 ARM  (usually capped after 5 years) you need to protect your largest investments by first understanding the tools available to the public to monitor these markets and second, knowing you can contact a professional to discuss the myriad of ways to hedge your real estate portfolio and be ready when you need to by utilizing the futures markets to protect your investments.

 

The hypothesis:  Generally speakingand largely from region to region diversity, when interest rates go lower, home prices go higher. Lower interest rates lead to increases in the value of real assets. Mortgage rates are sensitive to changes in Fed Policy, the 10yr note being the reference financial instrument moves in response to market reactions to Fed policy shifts.

 

When interest rates go higher, a definite time lag exists in the long run may make  home prices move lowerand real asset prices lower.

 

 

Watch futures market prices in the interest rate futures. Get comfortable watching the interest rate futures contracts.

 

I am by no means offering a pure hedge or even a short-term hedge in my analysis.

I believe what you will see and get a sense of the ebbs and flows of these markets from a visual perspective  while you are learning about the base currency (US Dollar) valuation of real assets changing and thereby affecting not only the value of the real assets you hold but also the cost to maintain those assets. The interest rate futures markets give you the clearest picture of how policy equates to real rates for you, the mortgage holder. 10yr Note Futures prices and chart

 

Major trends that are a serious harbinger of future housing price changes are important to understand so you may act to preserve, maintain and profit from potential shifts in policy.

 

 

FRED

 

Between 2008 and 2012 during the last recession, a major fed policy tool used was a series of fed fund rate reductions (net effect is the cost of money becomes cheaper relative to real asset prices), these calculated moves lowered the interest rate on longer term debt obligations  10Yr. Note Futures Prices and Chart as well as all dollar denominated Treasuries.

 

As you can see, Mortgage rates, I mean the 10yr Treasury Note rates (Freudian slip, sorry), are still at or near all-time lows.

In Summary, Familiarizing yourself with the interrelationships among Mortgage rates, 10 year treasuries and fed fund policy shifts are an important starting point for a conversation with a professional about protecting your family’s biggest investment.

 

A Cannon Trading professional is available between 8:30am to 5:00pm Eastern to answer your questions Call Now

 

Disclaimer – Trading Futures, Options on Futuresand retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledgeand financial resources. You may lose all or more of your initial investment. Opinions, market dataand recommendations are subject to change at any time.

 


Selling Future Options Premium

June 26th, 2019 Filed under Commodity Brokers, Commodity Trading, Day Trading, Economic Trading, Financial Futures, Future Trading News, Future Trading Platform, Futures Broker, Futures Exchange, Futures Trading, Options Trading, Trading Guide | Comment (0)

Futures Options Writing

 

Have you ever wondered who sells the futures options that most people buy? These people are known as the option writers/sellers. Their sole objective is to collect the premium paid by the option buyer. Option writing can also be used for hedging purposes and reducing risk. An option writer has the exact opposite to gain as the option buyer. The writer has unlimited risk and a limited profit potential, which is the premium of the option minus commissions. When writing naked futures options your risk is unlimited, without the use of stops. This is why we recommend exiting positions once a market trades through an area you perceived as strong support or resistance. So why would anyone want to write an option? Here are a few reasons:

  1. Most futures options expire worthless and out of the money. Therefore, the option writer is collecting the premium the option buyer paid.

 

  1. There are three things that happen to the underlying price of the option: Price goes up, goes down or stays the same. If when the option expires, the market price was at or below your strike price you collect all the premium if two of those things happen Time decay is the option writer’s friend.

 

  1. The writer believes the futures contract will not reach a certain strike price by the expiration date of the option. This is known as naked option selling.

 

  • To hedge against a futures position. For example: someone who goes long cocoa at 850 can write a 900 strike price call option with about one month of time until option expiration. This allows you to collect the premium of the call option if cocoa settles below 900, based on option expiration. It also allows you to make a profit on the actual futures contract between 851 and 900. This strategy also lowers your margin on the trade, and should cocoa continue lower to 800, you at least collect some premium on the option you wrote. Risk lies if cocoa continues to decline, because you only collect a certain amount of premium and the futures contract has unlimited risk the lower it goes. So you should trade with a stop on the futures contract. You can read on different strategies using options on futures here:

 

https://www.cannontrading.com/tools/education-futures-options-trading-101

 

Cannon offers SPAN margins for options sellers.

Many brokers will restrict or increase the margins required for options sellers, or traders who like to “collect premium”, but here at Cannon we can find you the best set up utilizing the multiple clearing arrangements we have with more than a few FCMs.

How much margin is required to sell a futures option?

That is a question we get asked often. The exact number is an output of SPAN margins. SPAN deserves a post on its own, but what it stands for is: Standard Portfolio Analysis of Risk. The formula takes into consideration volatility, time value, distance of strike price from current underlying future, and more.

Outright options may be easier to “guesstimate” margin than more complex strategies and spreads, but our free platform, E-Futures Int’l (https://www.cannontrading.com/software/e-futures-international )has a margin calculator built in so you can calculate the margin you will need for different strategies.

Commission for selling options on futures?

Commissions will vary based on the following:

Are you trading online or with a broker?

Trading volume

Account size

Risk responsibility.

The rates for selling options will vary from as low as $0.25 per side + fees for HIGH VOLUME, institutional accounts to $30 per side + fees for retail, broker assisted accounts.

 

Selling options is NOT for newcomers as it involves higher risk than buying options.

However, selling options and trading option spreads may offer an edge if done with proper risk management. No guarantees are made here.

Our strength at Cannon is our ability to offer CUSTOMIZED trading solutions, so contact a broker at:

https://www.cannontrading.com/company/contact

and learn more about risks and opportunities in futures trading (https://www.cannontrading.com/riskopportunity), what software you can use, consult with a broker on margin, commissions and strategy questions and much more!

 

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.


Daily NQ Chart & Support and Resistance Levels 6.05.2019

June 5th, 2019 Filed under Commodity Brokers, Commodity Trading, Economic Trading, Future Trading News, Index Futures | Comment (0)

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Voted #1 Blog and #1 Brokerage Services on TraderPlanet for 2016!!  

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Dear Traders,

Like us on FaceBook!
Get Real Time updates and market alerts on Twitter!
Trading 101: Free, Interactive Futures Trading Tutorial
An interactive tutorial on the basics ( and a little more) of futures trading.
Regardless if you traded before or new to the futures markets, this tutorial is nicely put together by our regulators and the CME and touches on a variety of sub topics that go into trading futures and options.
Browse through the tutorial at your leisure and at your own pace. Please call us if you have any questions about implementing your strategy or requesting a live demo or have feedback.

Good Trading

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

 

Futures Trading Levels

06-06-2019

 


Economic Reports, source: 

bettertrader.co

 

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 here in 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 judgement in trading.


Trading Videos+ Trading Levels for June 4th

June 3rd, 2019 Filed under Commodity Brokers, Commodity Trading, Currency Futures, Day Trading, Economic Trading, Financial Futures, Future Trading News, Future Trading Platform, Futures Broker, Futures Exchange, Futures Trading, futures trading education | Comment (0)

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Voted #1 Blog and #1 Brokerage Services on TraderPlanet for 2016!!  

____________________________________________________________________

Dear Traders,

Like us on FaceBook!
Get Real Time updates and market alerts on Twitter!
Trading 101: Trading videos on bollinger bands, Parabolics, Trading levels, Range Bars and more!
Watch the latest trading videos we have posted and shared with our clients!
In this week’s newsletter we are sharing two videos, each a few minutes long. The videos discuss practical tips for trading and sharing our experience with you
1. Using bollinger Bands as a possible tool for exiting trades
2. One way you can use the Parabolics study ( also known as PSAR) to manage current positions, possibly as a trailing stop
3. Different ways traders can utilize support and resistance levels in their trading.
4. Entering trades on a stop, using “price confirmation”.
5. Utilizing Range Bar charts for shorter term trading as a way to try and filter out some noise.

Good Trading

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

 

Futures Trading Levels

06-03-2019


Economic Reports, source: 

bettertrader.co

 

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 here in 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 judgement in trading.


Futures Levels & Economic Reports 11.04.2015

November 3rd, 2015 Filed under Economic Trading, Future Trading News, Futures Trading | Comment (0)

Connect with Us! Use Our Futures Trading Levels and Economic Reports RSS Feed.

Like us on FacebookFollow us on TwitterView our profile on LinkedInFind us on Google+Cannon Trading Futures Trading Resistance & Support Levels and Economic ReportsFind us on Yelp

1. Market Commentary
2. Futures Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Commodities Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Commodities Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Futures Economic Reports for Wednesday November 04, 2015

Hello Traders,

For 2015 I would like to wish all of you discipline and patience in your trading!

Did not have too much of added value to share with you today so decided to point you into a resource that is not on our site ( but will be soon)  that may be useful for you and includes a few videos:https://vimeo.com/cannontradingcompany/videos

Many ways to trade any market, many ways to lose money in any market and only very few ways to lock in gains. If you need help creating a trading plan, visit our broker assist services.

Many ways to trade any market, many ways to lose money in any market and only very few ways to lock in gains. If you need help creating a trading plan,visit our broker assist services.

GOOD TRADING

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

If you like Our Futures Trading Daily Support and Resistance Levels, Please share!


Futures Trading Levels

Contract Dec. 2015 SP500 Nasdaq100 Dow Jones Mini Russell Dollar Index
Resistance 3 2133.42 4783.00 18133 1212.83 98.32
Resistance 2 2121.83 4755.25 18015 1203.77 97.95
Resistance 1 2112.17 4732.50 17925 1195.83 97.60
Pivot 2100.58 4704.75 17807 1186.77 97.22
Support 1 2090.92 4682.00 17717 1178.83 96.87
Support 2 2079.33 4654.25 17599 1169.77 96.50
Support 3 2069.67 4631.50 17509 1161.83 96.15
Contract Dec. Gold Dec. Silver Dec. Crude Oil Dec. Bonds Dec.   Euro
Resistance 3 1156.6 15.66 51.25 157 22/32 1.1117
Resistance 2 1147.3 15.56 49.80 156 31/32 1.1077
Resistance 1 1132.2 15.41 48.85 155 28/32 1.1023
Pivot 1122.9 15.31 47.40 155 5/32 1.0983
Support 1 1107.8 15.16 46.45 154 2/32 1.0929
Support 2 1098.5 15.06 45.00 153 11/32 1.0889
Support 3 1083.4 14.91 44.05 152 8/32 1.0835
Contract Dec. Corn Dec. Wheat Jan Beans Dec. SoyMeal Dec. Nat Gas
Resistance 3 389.8 530.8 896.58 308.20 2.36
Resistance 2 386.0 523.7 891.67 306.70 2.32
Resistance 1 383.3 520.1 885.33 304.00 2.30
Pivot 379.5 512.9 880.42 302.50 2.27
Support 1 376.8 509.3 874.1 299.8 2.2
Support 2 373.0 502.2 869.17 298.30 2.21
Support 3 370.3 498.6 862.83 295.60 2.18
Economic Reports

source:http://www.forexfactory.com/calendar.php

All times are Eastern time Zone (EST)

 

Date 4:00pm Currency Impact Detail Actual Forecast Previous Graph
WedNov 4  3:15am EUR Spanish Services PMI 55.5 55.1
3:45am EUR Italian Services PMI 53.7 53.3
3:50am EUR French Final Services PMI 52.3 52.3
3:55am EUR German Final Services PMI 55.2 55.2
4:00am EUR ECB President Draghi Speaks
EUR Final Services PMI 54.2 54.2
5:00am EUR PPI m/m -0.4% -0.8%
5:30am USD FOMC Member Brainard Speaks
8:15am USD ADP Non-Farm Employment Change 183K 200K
8:30am USD Trade Balance -42.7B -48.3B
9:45am USD Final Services PMI 54.6 54.4
10:00am USD Fed Chair Yellen Testifies
USD ISM Non-Manufacturing PMI 56.6 56.9
10:30am USD Crude Oil Inventories 2.5M 3.4M
2:30pm USD FOMC Member Dudley Speaks
7:30pm USD FOMC Member Fischer Speaks

 

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 here in 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

 

Trading Tips You Can Use Right Away!


Watch 4 short videos on the topics of:
  • Using Bollinger Bands and Parabolics
  • Using range Bars for Day-Trading
  • The concept of Price Confirmation
  • How to Use Support & Resistance Levels
  • License 3 Broker at your Fingertips
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