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Watching Volatility When You Trade Options

When trading options, you want to be able to predict when changes in volatility — and thus changes in prices — are coming. One way to do that is to keep tabs on historical volatility [more…]

How Implied Volatility Figures In Options Trading

The first step to trading options based on implied volatility is to buy and sell them correctly at the best possible price. This may sound difficult but can be made relatively easy by option trading software [more…]

Using "the Greeks" to Measure Risks with Options

Options require you to pick up a bit of the Greek language, which is okay, because you need to learn only four words: delta, gamma, theta, and vega. The Greeks, [more…]

Trading in Futures and Options: Understand the Risk

Futures traders are, by nature, risk takers. And options are an integral part of the trading game that futures traders play, although it is worth noting that options and futures are viable stand-alone [more…]

Questions to Ask before Trading Futures and Options

Before becoming a futures and options trader, you need to know what you're getting into — and what you may get out of the risk-taking experience. Look to this checklist for key questions that can help [more…]

How to Choose a Futures and Options Broker

If you are interested in trading options but aren’t sure about your own ability to trade them, you need to find a good options broker/advisor to help you out. A broker can assist with strategy development [more…]

How the Fiat System Works

The global monetary system is what’s called a Fiat system in which money is a storage medium for purchasing power and a substitute for barter. Each dollar bill, euro, yen, gold ingot, or whatever currency [more…]

Where Does Money Come From?

Central banks create money either by printing it or by buying bonds in the treasury market. When central banks buy bonds, they usually buy their own country’s treasury bonds, and their purchases are made [more…]

What's the Purpose of Central Banks?

Central banks, like the Federal Reserve in the United States, are designed to make sure that their respective domestic economies run as smoothly as possible. In most countries, central banks are expected [more…]

Monetary Exchange Equation Relates Money Supply to Inflation

You can use the monetary exchange equation to explain the relationship between the supply of money and inflation, as follows:

Velocity x Money Supply = Gross Domestic Product [more…]

How Money Supply Affects Commodity Tendencies

As a general rule, futures prices respond to inflation. Some, such as gold, tend to rise; others, such as the U.S. dollar, tend to fall. Here are the basics of money supply/commodity tendencies: [more…]

How Money Flows Affect the Financial Markets

When central banks buy bonds from banks and dealers, they’re putting money into circulation, making it easy for people and businesses to borrow. At the juncture where money becomes easier to borrow, the [more…]

Economic Reports Provide Financial Insights

Economic reports — which include the Consumer Price Index, the Producer Price Index, employment updates, and releases on consumer confidence — are useful resources for making informed investing or trading [more…]

How the Employment Report Affects Financial Markets

The U.S. Department of Labor’s employment report is the first piece of major economic data released each month. The report is released on the first Friday of every month. Bond, stock index, and currency [more…]

What's in the Producer Price Index Report?

The Producer Price Index, or PPI, is an important report, but it doesn’t usually move the markets to the same degree as the Consumer Price Index (CPI) and the employment report. [more…]

Consumer Price Index Report Details Inflation

The Consumer Price Index, or CPI, is the main inflation report for the futures and financial markets. Unexpected rises in this indicator usually lead to falling bond prices, rising interest rates, and [more…]

ISM Report on Business Shows Manufacturing Economic Status

The Institute for Supply Management’s (ISM) Report on Businessusually moves the markets — or, in other words, is a market mover. The ISM measures the health of the manufacturing sector in the U.S. This [more…]

What Consumer Confidence Reports Reveal

The report that measures consumer confidence is a big report that comes from two sources that publish separate updates, the Conference Board, a private research group, and the University of Michigan. [more…]

Beige Book Report Summarizes District Economic Activity

The Federal Reserve produces the Summary of Commentary on Current Economic Conditions, otherwise known as the Beige Book. The Fed collects anecdotal reports from Fed bank presidents, key businesses, economists [more…]

Housing Starts Reports Reflect Construction Trends

Released every month, housing starts statistics are compiled by the U.S. Commerce Department and reported in three parts: building permits, housing starts, and housing completions. [more…]

How Oil Supply Data Informs Traders

Oil supply data became a central report outside of the oil markets in 2004 and 2005 as the price of crude oil soared to record highs after the war in Iraq. [more…]

How to Use Straddles in Futures and Options Trading

In advance of the release of a big economic report, you can set up a straddle. This strategy is simple to execute and the financial move can be quite profitable. [more…]

Factors to Consider When Using Straddles

You can create a straddle when you simultaneously buy a put and a call for the same stock at the same strike price and of the same duration. Keep in mind that there are some important factors that you [more…]

Trading on Margin Basics for Futures and Options

Margin is what makes futures trading so attractive, because it adds leverage to futures contract trades. The downside is that if you don’t understand how trading on a margin works, you can take on some [more…]

Are You Prepared to Trade in Options?

If you’re thinking about options trading, you'd be wise to consider the following facts before you take the financial plunge. You can then decide whether to include options in your trading platform. [more…]

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Personal Finance