Matt McKinney's Options & Futures Trading Strategies Blog

Direct: 312-277-0115  |  mmckinney@zaner.com

Matt Mckinney's Options & Futures Trading Strategies Blog is a blog dedicated to bringing updates, news and commentary on futures and commdity markets.

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Futures, options and forex trading is speculative in nature and involves substantial risk of loss.  These recommendations are a solicitation for entering into derivatives transactions.  All known news and events have already been factored into the price of the underlying derivatives discussed.  From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives.


OPTIONS PLAY: Falling Stock Indices and The Grains

Posted on 8/22/2015 8:31:56 AM by: Matt McKinney, Market Strategist @ Zaner. 312-277-0115.

Direct-312-277-0115, http://www.mmckinneyfutures.com/

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

 

OPTIONS PLAY: Falling Stock Indices and The Grains

How will the Stock Indices like the E-mini S&P (ES), Mini-Dow (YM), and Mini Nasdaq (NQ) impact the grains in the coming days and weeks?

Fundamentally, I believe the global equity market collapse as well as the Stock Index Futures here in the U.S. making new lows for the move will have a tremendous impact on the grains in short to mid term. What I believe will happen is the theory of margin calls kicking in on the "Big Money", like the Funds and Institutions. You see, I tend to think that these type of "Big Money" traders buy a lot of stock on margin from their respective brokerages and banks. Why? Because they can. Yeah that's right everyone is suspect to margin calls in this industry.

Here's how this could play out in the coming days and weeks. If we see equities globally and here in the U.S. continue to sell off eventually banks and brokerages will make margin calls to the "Big Money" traders like  Institutions and Hedge Funds then they will be forced to sell other assets and derivatives to meet these margin calls. That means, theoretically, they sell grains, metals, softs, meats and more to meet their margin calls in the falling Indices. Then we see the "risk off" trade on steroids and the only attractive safe haven plays are the U.S. Treasury futures and the USD Index futures. That's my take, although I do have some serious long-term support on the E-mini S&P monthly chart which pretty much mirrors the YM and NQ chart and that could ruin my prediction.

 Technically, I have added my favorite technical indicators to the charts below. I have coined them the "10/20/50/BB Trend Finder". They are the 10 (red line), 20 (green line), and the 50 (blue line) day Simple Moving Averages or SMA's. I have also added Bollinger Bands or BB's (light blue shaded area) and Candlesticks (the red and green bars with the candle stick wicks, and on this daily chart each bar represents one day of trading). These few technical indicators can tell me many, many different characteristics about the market at a quick glance so I have them saved on my charts in MARKETHEAD, so they can populate on any chart I choose at the click of a mouse.

These indicators on the daily Soybean chart below tell me that the beans are in a PRINCIPAL downward trend. This occurs when the 10 day SMA (red line) crosses down and under the 20 day SMA (green line) as both indicators point lower on sharp angles and the market trades below the 10 day SMA. A PRINCIPAL trend down is the strongest form of a downward trend that my "10/20/50/BB Trend-Finder" can show me. This is the case right now in the November Soybeans, as you can see on the chart below.

I figured this out by putting my "10/20/50/BB Trend Finder" on the daily charts and applying these indicators to the charts at the click of a mouse which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne , which is a web application that we have developed for our clients called MARKETHEAD where I get about 70-80% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 15 years. So if I'm using it then maybe my readers should check it out. Yes? 

 

DAILY SOYBEAN CHART

Technically, on the daily December Corn chart below my "10/20/50/BB Trend-Finder" strategy is showing that the market is in a sideways trend.  I know this because the 10 day SMA, 20 day SMA, and the 50 day SMA are all pointing sideways and the market is trading right on the 10 and the 20 SMA's.

DAILY CORN CHART

 

OPTION PLAY:

For exact details on strategies, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or mmckinney@zaner.com .

It is also important to note that I am not married to a market, but to trends. I believe that we are on the verge of lots of upcoming trends. So get in touch with me and I'll show you what could be right around the corner in terms of trending markets and how to trade them. There could be upcoming trends in the energies, indices, financials, precious metals, softs and more.

 

 

FREE QUOTE- "When you are good at something, you'll tell everyone. When you're great at something, they'll tell you." - Walter Payton

 

 

 

FUTURES, OPTIONS AND FOREX TRADING IS SPECULATIVE IN NATURE AND INVOLVES SUBSTANTIAL RISK OF LOSS. THESE RECOMMENDATIONS ARE A SOLICITATION FOR ENTERING INTO DERIVATIVES TRANSACTIONS. ALL KNOWN NEWS AND EVENTS HAVE ALREADY BEEN FACTORED INTO THE PRICE OF THE UNDERLYING DERIVATIVES DISCUSSED. FROM TIME TO TIME PERSONS AFFILIATED WITH ZANER, OR ITS ASSOCIATED COMPANIES, MAY HAVE POSITIONS IN RECOMMENDED AND OTHER DERIVATIVES.

 

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERDLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STICKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT OPTIONS PRICES MAY ONLY MOVE A LITTLE.

 

THE LIMITED RISK CHARACTERISTIC OF OPTIONS REFERS TO LONG OPTIONS ONLY AND REFERS TO THE AMOUNT OF THE LOSS, WHICH IS DEFINED AS THE PREMIUM PAID ON THE OPTION(S) PLUS FEES.


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