Options On Futures And Options Trading Witching Dates

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Options trading is one of the ways to profit from the volatility in stocks. Options contracts give you the right but not the obligation to buy or sell the underlying stocks before a certain date. So instead of directly investing in those stocks, you can invest in options and build a much larger portfolio with the same investment.

Options get effected by volatility in the market as well as the time. You need to know certain dates that are very important if you are seriously into stock options. These dates are known as the Witching Dates. Now many people trade stocks. For them stock options should not be new. They can invest in stock options. However,stock options are a bit tricky.

All stock options contracts expire on the third Friday of each month. Options on futures expire on different dates depending on the contract. Sometimes, different classes of options expire on the same date. These dates are known as the Double, Triple and Quadruple Witching Dates.

Double Witching Days are those when any two of the different classes of options contracts like the stock options, stock index options or the stock index futures options expire. Triple Witching Days is when these three classes expire on the same date. This date is the third Friday in the last month of each quarter. Quadruple Witching Days are those when these three classes of options contracts expire along with the individual stock futures options.

So what are Double Witching Dates? These dates are those when the two different options contracts on stock indexes, futures and stocks expire. It can be stock index options and stock options or stock options and options on stock index futures options. Similarly Triple Witching Dates are those when three different categories of options contracts expire on the same date. In the same way, Quadruple Witching Dates are those when four different categories of options contracts expire.

Now when you trade a stock index futures options contract, you need to first master trading that stock index futures contract. Now stock options and stock index futures options are different contracts. You need to understand the difference between them.

Knowing these dates helps you to trade or not trade on that date keeping in view the options contract that you are trading. So when you trade options you need to understand these options witching dates as they can affect your portfolio returns.

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Trading Commodity Indexes Can Make You Rich!

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Everyone knows what a stock index is. It is price weighhed or value weighted measure of a basket of stocks. Indexes are very important in the world of investing. If you want to invest in commodities, you should invest in a commodity index.

Now just like the stock indexes, commodity indexes track the performance of a basket of commodities like coffee, aluminum, copper, lead, nickel, wheat, corn, soybeans, Zinc, gold, silver, sugar, cocoa, cotton, lean hog, live cattle, feeder cattle, heating oil, gas oil, unleaded gas, crude oil, natural gas and so on.

The most popular commodity index is the Goldman Sachs Commodity Index (GSCI). GSCI tracks the performance of 24 commodity futures contracts. Another popular commodity index is the Reuters/Jefferies Commodity Research Bureau Index (CRB).

Another very important commodity index is the Dow Jones-AIG Commodity Index abbreviated as DG-AIGCI. Now DG-AIGCI places a premium on the liquiduty and production of the commodities. This ensures that no commodity dominates DG-AIGCI. Now CRB is an important commodity index and it is widely followed by hedge funds, institutional investors, retail investors and economists as a commodity benchmark. CRB is based on a basket of 19 commodities that have been primarily chosen on the basis of their liquidity and performance in the past. If you are into commodity investing than you need to keep an eye on CRB.

Rogers Commodities Index (RCI) has a grand list of 35 commodities and tracks the most commodities amongst the different commodity indexes. Deutsche Bank Liquidity Commodity Index (DBLCI) is the newest kid. There are many ways to invest in these commodity indexes.

There are futures contracts on some of these indexes that track their performance. So trading these futures contracts can be profitable in times of a commodity boom just like the one that is expected as the global economy recovers from the financial crisis. Then you can also trade futures contracts on individual commodities like gold, silver, crude oil, coffee, copper and stuff like that. Now how to do commodity investing. Recently there was a news item that the famous George Soros is betting more than $600 million of his hedge fund on gold. Gold is a very important commodity that is expected to skyrocket in the near future. Remember crude oil the way, it had skyrocketed in the summer of 2008. Now, the most direct method is to trade futures contracts based on one of the above commodity indexes.

Another method is to invest in commodity mutual funds that track these indexes. One way is to invest with a third party manager that uses commodity indexes as the basis of their investment strategies. Some of these vehicles include mutual funds, commodity pools or Commodity Trading Advisors (CTAs).

This is a highly popular alternative that a good investor should not miss. Last but not the least, is the great investment opportunity that Commodity ETFs ( Exchange Traded Funds)provides. These Commodity ETFs track the performance of a commodity index and provide you with a great opportunity to profit from the boom in the commodity market!

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How To Trade With Bollinger Bands?

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Bollinger bands are an effective technical analysis tool that is used to measure the volatility in the market. So what are Bollinger Bands? Bollinger bands are bands plotted above and below a moving average. The recommended moving average is the 20 period average that is an effective representation of the intermediate trend.

Bollinger bands can be used on any market. They are universal in nature in the sense that you can use them on any timeframe whether it is intraday like 5 minutes, 15 minutes, hourly, 4 hourly or daily, weekly monthly. Bollinger bands help you know whether volatility in the market is low or high. What this means is that prices are swinging wildly ir not.

Now when the volatility in the market is low, these bands get narrow and when the volatility in the market increases,these bands widen too. Volatility is a very important variable for an options trader. The more volatility there is on the underlying stock, the more option price will swing.

When prices are above the upper band, this is taken as a sign of strength in the market. However, when the prices are below the lower band, this is taken as a sign of weakness in the market. Now, prices can be within the band or outside the band. When prices are outside the bands, this is taken as a signal that the trend is most likely to continue.

Rapid and substantial price moves often tend to happen after the band tightens. Bollinger bands are often used in conjunction with other technical indicators to detect high probability trend reversal or turning points. The primary indicator that works best with these bands is the RSI (Relative Strength Index), MACD or the CCI ( Commodity Channel Index).

Now the recommended setting for these bands is two standard deviations above and below the moving average with the period 20. These bands will keep on moving close or away from the moving average as a function of the market volatility.

In case of very short timeframes, the moving average period should be lowered to 10 and the standard deviation should also be decreased to one and a half for the two bands. But sometimes, you want to trade a longer timeframe. In that case, 50 is usually used as the period for the moving average with longer trends and the standard deviation settings for the two bands should be increased to two and half standard deviations.

As said before, these bands are traded in conjunction with other technical indicators. In case of the stock market, a period of 20 for the moving average is okay. Trading these bands is one of the most powerful concepts that is available to any trader whethet stocks, futures, forex, options or commodities.

Now these bands do not provide absolute signals when prices touch these bands. These signals should only be taken as relative and confirmed in conjunction with other technical indicators.

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A Silver ETF That Can Be Highly Profitable!

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Everyone is talking about gold. Recently gold prices breached the historical barrier of $1200 per ounce for the first time. Everyone started investing in gold. Gold prices made a retracement. Now this doesn’t mean that the bull run in the gold market is over. However, there is another metal that has ten times more potential as compared to gold.

Yes, I am talking about silver. Silver is also a precious metal that has been considered valuable since ancient times. Gold was the best and silver the second best in human history. Kings and queens would hoard gold and silver as a store of their wealth. Even during ancient times, gold and silver functioned as a sort of international currency.

However, silver has far more industrial applications as compared to gold. Silver is being used extensivley in the electronic industry, batteries,solar panels, TV, water, medical applications plus a host of other industries. With the global economy finally out of the recession this year, demand for silver in these industries will skyrocket.

Now the supply of silver is limited. What this means is that silver price is going to rocket when the demand is going to increase. There is a limit to oil price increase. When the oil price becomes too high, consumers stop using private transport and switch to public transport. Gold has not many industrial applications. So high gold prices don’t have much impact on the global economy.

Now an important question that comes to our mind is that is this rise in silver prices speculative or due to the real fundamentals. As said before, high silver demand is going to drive this price rise as silver has a large industrial demand.

The bull market in silver is going to last long as the global economy enters its expansion phase. So in nutshell, this might be the best time to invest in silver stocks. However, investing in Silver ETFs can be an even better option as compared to silver stocks.

One of the best Silver ETFs is the ETF with the NYSE ticker symbol SLV. There might be others too. You do the research, pick the best ones and invest in them as the silver bull market is about to start.

There are a few silver mining companies that focus exclusively on the mining and refining of silver. Investing in the stocks of these silver mining companies can also be one of the options. Whatever, you decide this is the best time to invest in silver that you shouldn’t miss!

Mr. Ahmad Hassam has done Masters from Harvard University. Read this 40 page shocking Gold and Silver Investing FREE Report. Get three great Swing Trading Reports, The Forex-4 Pack, The Quantum Swing Trading and the Profit Button that applies no matter what you trade forex, stocks, futures or options.

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Five Reasons Why You Need To Try Retail Forex

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With the stock market and other financial markets down, retail forex market continues to experience explosive growth that is expected to last beyond 2010 for many years. The primary reason for this continued growth is due to the fact that sophisticated investors are turning towards forex trading as a way to diversify their portfolios. This is being driven by the 24 hour liquidity, tight spread and easy and ready access.

Now, many sophisticated investors are also turning towars forex as well. If you have some experience of trading stocks or bonds than you can esily switch to forex trading as the fundamental analysis and the technical analysis basics are almost similar.

Recent advances in technology means price transparency and a better trading experience with the use of stop loss and trailing stops. What this means is that traders can execute their trading plans using a combination of these orders to better manage their currency risk.

Another reason for the growth in retail forex is the availability of managed forex accounts. Managed forex accounts provide opportunity to profit from forex without having to trade it. However, investors have full access and control over their capital.

In the last decade, algorithmic trading systems became more and more sophisticated. These automated trading systems are also know as Expert advisors or Forex Robots. Over the last few years, forex robot developers have been able to develop a number of good robots that have been giving consistent performance.

Recently the first Forex Robot World Cup (FRWC) was held. It had a cash prize of $150,000. The winner robot developer was a trader from Croatia who won the $100,000 cash prize when his robot made something like 150% in one month in the live trading competition.

Forex robot developer from Croatia won the cash prize of $100,000. The next round of the FRWC will be even bigger than the first and will start in a few months time. Transparency and tough participation rules meant that the robots that took part in this competition had to really prove themselves in live trading. This live trading started in December and ended in January.

What this means is that with a proven and tested robot they can trade forex without having to sit in front of their computers for long hours. These robots are programmed to trade automatically. The development of forex robots and their improved performance is going to drive the growth in the retail forex in the coming years.

Mr. Ahmad Hassam has done Masters from Harvard University. Read this shocking 40 page FRWC Brutal Truth FREE Report on forex robots. Download this 1 Minute Forex Trading System FREE that makes money anytime instantly.

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