Futures Magazine November 01, 2008
Cover Story
Great bailout of 2008: What’s next?
Former Federal Reserve Board Chairman Paul Volcker congratulated CME Group on its timing as he spoke at the inaugural CME Group Global Financial Leadership conference on Monday, Sept. 15. That day
Trading Techniques
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New tools for spread trading
Copulas are tools for modeling the dependence between random variables. The word copula is derived from the Latin word copulare, meaning to connect or to join. Only recently has this theory found its
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Using moving averages to do better than average
An average is designed to give the user a fair representation of the scope or quality of a larger group of numbers. When it comes to financial markets, moving averages are used to provide a fair representation of recent price action and help traders anticipate what may come.
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Spread pros & cons
•Spreads are usually less volatile and prices move less quickly, which can be good for beginners who may be intimidated by the speed and price fluctuations of a single outright trade in the futures
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Spreading the wealth
In the last five years in the world of commodity resources, few sectors have moved as quickly into the mainstream consciousness as the agricultural and soft commodity markets. This is for good
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Calculating and using the CPFL
When data for OEX Index options was first offered in early 1983, the only practical means of massaging the numbers was to manually collect it from print publications. Daily statistics could be
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Options redux: 25 years into the revolution
On March 11, 1983, a revolution in trading began when the Chicago Board Options Exchange introduced the CBOE 100 Index. That first cash settled index, which soon morphed into the famed S&P 100 just
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Navigating markets in the age of index funds
In the world of commodity trading, long only commodity funds (LOCF), or index funds as they are otherwise known, have come to dominate the futures industry through both their sheer position sizes and
Technology & Trading
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The new arms race and the coming revolution
Back in the old days, runners, the people who grabbed orders and ran them into the pits where trades were executed, were called the “wheels on the bus,” and speed was of paramount importance. Today
Forex Trader
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Market turmoil and the U.S. dollar
The turmoil on Wall Street began over a year ago and has grown to become the most serious financial crisis since the Great Depression. Its core causes are many, but the key role complex derivatives
Breaking News
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Energy spec bill passes
The legislative game of ping pong over energy speculation continued on Sept. 18 when the House of Representatives passed H.R. 6604, The Commodity Markets Transparency and Accountability Act of 2008,
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China open, Europe closed
On Sept. 18, just prior to the announcement of the SEC ban that ended on Oct. 8, the UK Financial Services Authority prohibited short positions in UK financial sector companies until January 2009,
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Europe pays price
London swaps dealers were called into the office on the weekend of the Lehman implosion to make sure all of their obligations were met and went home two hours later. Officially, they said everything
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Rescuing the bailout
To say the first iteration of Treasury Secretary Henry M. Paulson’s $700 billion bailout plan was poorly received understates the case. In a closed-door meeting, House Minority Leader John A. Boehner
Futures 101
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Systematic approach
Trading systems are collections of rules for buying and selling commodities and stocks. As useful trend-identifying techniques, moving averages are common elements in trading systems. Conventional
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Noise annoys: How moving averages can help
Sometimes, it’s hard to see where the market is headed. It drives higher, only to fall back. Price might careen wildly sideways, ultimately ending several points higher or lower. Amid such madness,
Industry Trends
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Japan: Chicago Cubs of futures?
It’s a cycle familiar not only to fans of Chicago’s beleaguered baseball team, but also to anyone working in the futures sector of the world’s second-largest economy, which has been in a perpetual
Markets
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Seasonal trade, technical entry
Markets always find a value and always provide an opportunity. According to Moore Research, seasonal lows in soybeans are typically in place the first week of October and the market moves
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Scything up the grain markets
During planting season, the grain situation looked grim. Inventories were perilously low and large agricultural production areas were drought stricken. In the Midwestern United States, cold wet
Editor's Note
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Smartest guys in the room?
The October rout of the stock market and the bailout plan reminded me of a line in the movie “Armageddon.” In the movie, Earth was being threatened by a killer meteor, and NASA was trying to
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Sound off
The sentence that reads “The CFTC has always had the right to set a minimum ‘Adjusted Net Capital’ (ANC) for forex dealers who, unlike futures brokers, do hold customer funds and thus expose
Book Reviews
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Money-Making Candlestick Patterns
Japanese rice traders in the eighteenth century utilized candlestick patterns as a reliable way to predict future demand. Today, traders draw from approximately 60 candlestick patterns to predict
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The Rookie’s Guide to Options: The Beginner’s Handbook of Trading Equity Options
With more than 30 years experience in the equity options market, Mark Wolfinger isn’t afraid to make a trade. He doesn’t want you to be either. In his introductory book to equity options trading,
Market Analysis
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Crude oil's slip and slide
“If we are still in this panicked fearful uncertain mode, demand will be restricted,” says Thomas Hartmann, analyst for Altavest Worldwide Trading; and even at these levels, consumers are likely to
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S&P 500 plunges
In a sickening slide, the S&P 500 plunged to 837 in early October from 1277 on Sept. 2. “It looks like a market in virtual free fall,” says John Welsh, SVP of Peregrine Financial Group. And as it
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Yen on the move
After a decade as the weak sister of major currencies, the Japanese yen has greatly strengthened against the U.S. dollar. “There’s not a fundamental reason for this. It’s more a trading dynamic,”
Managed Money
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Volatility explodes
Tom Sowanick, chief investment officer for fund of fund Clearbrook Research, gave his take on the current market turmoil at an Oct. 6 panel on alternative investments. Sowanick said demand for
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Is this managed futures’ time to shine?
One of the selling points for managed futures has always been their use as a diversification from traditional equity and bond portfolios. Moreover, numerous studies have shown that managed futures
New For Traders
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New for Traders
CME Group launched U.S. Midwest Domestic Hot-Rolled Coil steel futures contracts and expanded random length lumber futures and options on futures contracts and now offers them on CME Globex.
People
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Manrique named CEO of Stoxx Limited
Ricardo Manrique was named CEO of Stoxx Limited. Previously, he worked in Latin American derivatives sales and structuring at Standard Bank Plc. “Ricardo’s great experience in index development,
Trader Profiles
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Herbert: Taking the heat
Phillip Herbert’s theory on the market is simple - if you want to make money, you have to withstand the heat. He and his partner Alan Zenk liked this theory so much that they named two of their
Profiles in Forex
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Regulation and the credit crisis
The collapse on Wall Street set off a regulatory firestorm in Washington, and the futures and options industries were shaken by the SEC’s temporary ban on short selling for 799 financial companies on
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Clearing the air
When exchange clearing members come under stress, the clearinghouse gets active, so we talked to Kim Taylor, managing director and president of CME Clearing House Division, to see what steps were
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Sold short
It’s Monday Sept. 22. The week before, Lehman Brothers shocked the financial world by declaring bankruptcy and sent the markets into an epileptic siezure. But for me and the hedge fund I work for,
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Buy Euro puts
In October, my view was that the Euro would lose value based on its correlation to lower energy, metal, and global stock markets (see strategy below). I recommended a strategy to buy a EUR TWI Put
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Jamie Charles: Discretion in management
In college, Jamie Charles, chief investment officer of Greenwave Capital, began trading with money he earned over summers waiting tables in the Catskill Mountains; and in 1980, during his junior year
