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: WHAT I DO FROM A TO Z
This article is about my personal service and my favorite technical trend identifying indicators like Simple Moving Averages, Bollinger Bands, and Candlestick charts.
I have been a full service options broker for the last fifteen years, meaning I do a lot of smiling and dialing, a lot of research, I make a lot of trade recommendations, and updating. I write articles on various sites all over the internet explaining my latest options strategies. The firm I work for is Zaner Group LLC, one of America’s oldest family owned and operated independent IB’s. This means that when Jack Zaner started this company about 33 years ago he did it with his own funding. Matt Zaner, Jack’s only son is now owner and CEO and has run the company for the last thirteen years. The clear benefits of Zaner being an independent IB is that we can pick and choose which clearing firms or FCM’s we feel fits our client needs the best.
Since my specialty is making full-service options recommendations the “service” part of my job is the most important so after researching 5 or 6 different clearing firms that Zaner was using at the time I settled on the clearing firm ADMIS. Otherwise known as Archer Daniels Midland Investor Services and the reason for this was simple. They gave me the best service which I could in turn pass on to my clients. They stood head and shoulders above the rest in this category. There was no “passing’ the buck. They handled my problem for me on the spot and even followed up the next day to see if I was treated okay-WOW, what a breath of fresh air. Right then and there I knew ADMIS was the clearing firm for myself and more importantly for my very valuable clients. Not to mention by following my instincts, the very vast majority of my clients were spared the nightmares of PFG and MF Global.
Since then I have developed valuable relationships with the folks at ADMIS. Like the new accounts department, the margin department, the floor traders, the trade desk, the customer service department, the trading platform support team, and many, many others at ADMIS. Five years later it’s still all good.
So In general here’s how it works, I write an article on a various number of sites on the internet about 2 or 3 times per week. Sites like Inside Futures, Barcharts, Futures Magazine, and Markethead to name a few. In these articles I try explaining my trend following technicals along with some pretty obvious fundamentals. Within the article I put one or two offers there. Maybe a report on option basics or a report on 25 option strategies. If the prospect wants the report, then they have to give their name, phone number, and email and that’s how I get a lead.
I have quite a following, in fact this article received 933 views in less than 24 hours on one site alone. Anyway, once I call the prospect I will make an attempt to show him or her my latest trade recommendation, probably the one I wrote about in the article or maybe not, markets move fast. Once the client understands the risk that is involved in trading options on futures, and I have qualified them and I feel that they can handle this type of high risk/high reward trading I will walk the prospect through the paperwork to get the account set up via a screen share. This makes it very easy for someone to open up an account. Once the account is funded and the client is ready to trade, we will go over our strategies again. If we like what we see, we will formally tape record the order instructions and go over the risk again in great detail and once the prospect gives me permission to enter the orders on his behalf. I will use a limit order, so I can get my client the best possible price. If we feel the market environment has changed since we first started talking we can wait to enter the market….we don’t have to jump right in just because the account is funded. From that moment forward I walk my client through the trade every step of the way keeping them posted on a regular basis providing good news as well as bad news and making the recommendation as to when to get out of the trade.
I will also provide other option play’s in different markets all “gift wrapped” with clear cut particular strategies and then it’s always up to the client to make the final decision on anything we do. The client is the boss, but we work together as a team. The real promise is that I’m here in front of the screen all day, every day watching my clients positions so that they can do their full-time jobs. My clients can depend on me to call them if anything has changed, if we need to get out, or if it’s just a general update. Of course as my client you can call me as often as you like, but you’ll hear from me usually at least once per week.
The options plays that we get involved with usually have expiration dates that are 45, 60, 90, 120 days out, but we are never “locked” in. We can buy one day and sell the next if we want. The sooner we can get out with a profit, the better the trade I believe. As long as it’s a respectable profit. On that point, when we buy options or option spreads we have a limited risk and when we sell naked options or option spreads we have unlimited risk.
So according to Investopedia the definition of “SIMPLE MOVING AVERAGE-SMA” is-
“A simple, or arithmetic, moving average that is calculated by adding the closing price of the market for a number of time periods. Short-term averages respond quickly to changes in the price of the underlying, while the long -term averages are slow to react.”
The definition of BOLLINGER BANDS by Investopedia is-
“A band plotted by two standard deviations away from a Simple Moving Average, developed by a famous technical trader John Bollinger”
The definition of Candlestick charts or bars according to Wikipedia is -
“A candlestick chart is a style of bar chart used primarily to describe price movements of a security, derivative, or currency over time. It is a combination of a line chart and a bar chart, in that each bar represents the range of price movement over a given time interval. It is most often used in technical analysis of commodity or future price patterns. They appear superficially similar to box plots, but are unrelated.”
The best way for me to show you how I use these fundamentals, technical, and how I have “coined” the term SUPER-TREND is to show you an example ON A CHART, in one of my latest articles. I wrote this article below on 1/15/14 so it is still extremely relevant to today.
OPTIONS PLAY: POTENTIAL CORN PLAYS AND WHY
The long-term trend in CORN is still intact and in my opinion could pose several opportunities for options traders.
Fundamentally, there are some tremendously bearish reasons why the long-term bear move in CORN could continue. Here are three of them according to Hightower Reports:
1. Traders are questioning feed demand.
2. Many speculators and funds see the bear market in CORN extending far into 2014 and see any rally as a selling opportunity.
3. More specifically, the USDA report last week reported that “On farm” supplies totaled 6.38 billion bushels, up 39% from a year ago and “Off farm” supplies totaled 4.05 billion bushels, the highest on record.
When Does Weather Matter: http://www.zaner.com/offers/?page=6&ap=mmckinne
Technically, I have placed several indicators on this monthly CORN chart. They are the 9, 20, and 50 period SIMPLE MOVING AVERAGES (SMA’S), the BOLLINGER BANDS (BB’s, light blue shaded area), VOLUME, and CANDLESTICKS. The first item that I notice from placing these indicators on the chart is the cross of the 9 period SMA (red line) under the 20 period SMA (green line) back in the month of July 2013 as both the indicators point downward on very sharp angles AND the market trades below the 9 period SMA (red line). This to me, is what I have coined a long-term “SUPER-TREND” down. I expect this technical trend to continue.
I also noticed after applying my favorite technical indicators to this monthly CORN FUTURES chart that this market is somewhat over sold for the following reasons:
1. The market is trading well below the 9 period SMA (red line) which is now the first area of resistance in my view. The market is also well below the 20 period SMA (green line) which is now the second area of resistance. Typically the market could move back up to these areas and hold, only to go on and make new lows, if they are real resistance.
2. Next, the market is trading well below the longer term 50 period SMA (blue line), which could also be considered the second area of resistance. Although, oddly enough it is on a slightly upward slope.
-However, I am of the belief that markets can remain over sold for long periods of time, particularly if the market has strong downside technical momentum. Finally, I can’t help but notice how the top and bottom line of the BOLLINGER BANDS look. With the top one pointing so high that it is literally OFF THE CHART and the bottom line is pointing almost straight down. Very conflicting indications in my opinion. Not enough though to change the overwhelmingly long-term bearishness on this monthly CORN chart with my favorite indicators on it.
This is just my technical opinion based on my favorite trend identifying indicators on the monthly CORN chart below. Nothing works 100% of the time, but I like the long-term trend to remain down for the foreseeable future.
Moving Average Formulas and Strategy Guide: http://www.zaner.com/offers/?page=3&ap=mmckinne
MONTHLY CORN CHART
Since, I am now bearish in the long term on this market there could be several ways to play this market with options and one could be to buy straight put options or bear put spreads in a 3 to 1 ratio with a call for a hedge or “insurance” in case the trend changes on a dime and the market rallies. Another potential play could be to sell naked options or option spreads and collect premium, again maybe with protection in the form of a futures contract or with other option strategies. Remember, when you sell naked options you have unlimited risk and should have a “well funded” account of risk capital. For exact details on months, expiration dates, strike prices, risk and number of positions feel free to contact me at firstname.lastname@example.org.
I can also put you in touch directly with the VP and Chief Marketing Strategist of the Zaner Ag Hedge Group if you are a mid to large size farmer.
FREE QUOTE- “Change is the law of life. And those who only look to the past or the present are certain to miss the future.” -JFK
25 Option Strategies: http://www.zaner.com/offers/?page=11&ap=mmckinne
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 COMMISSIONS.