Commodity Market Trading and Investment: A Practitioners by Tom James PDF

By Tom James

ISBN-10: 1137432802

ISBN-13: 9781137432803

ISBN-10: 1137432810

ISBN-13: 9781137432810

This booklet deals functional wisdom, research, buying and selling recommendations and methodologies required for the administration of key overseas commodities. the writer explores every one point of commodity buying and selling intimately and is helping the reader to enforce powerful options to construct a robust portfolio. Early chapters set the present scene of commodity buying and selling markets sooner than occurring to debate the elemental tools and instruments utilized in navigating commodity markets. the writer presents distinct, empirical case stories of traded common assets in an effort to explicate the monetary tools that allow execs either to take a position and to alternate them effectively. Later chapters examine the psychology and behavioural impacts in the back of optimum marketplace buying and selling, during which the writer encourages the reader to appreciate and wrestle the hindrances that hinder them from attaining their complete buying and selling potential.

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Extra info for Commodity Market Trading and Investment: A Practitioners Guide to the Markets

Sample text

A commodity option contains the right to buy or sell a specific future contract. There are two distinct types of options: the call option and the put option. The call option contains the right to buy the underlying future contracts and the future option contains the right to sell the underlying future contract. Note that call and put options are not the opposite of each other, nor do they offset position. Call and put options are completely separate and different contracts. Every call option has a buyer and a seller and every put option has a buyer and a seller.

Regardless of the order in which the transaction may occur, buying a lower price and selling at a higher price will result in a gain in the future position. Selling now with the intention of buying back at a later date gives a short future market position. A price decrease will result in a future gain, because you will have sold at a higher price and bought at a lower price. For example, let us assume cash and future prices are identical at $12 per bushel. 00 per bushel and the value of your short future market position increases by $1 per bushel?

These features allow the seller of ag commodities to establish a floor (minimum) selling price for protection against falling markets without providing the opportunity to profit from a rising market. Likewise the option allows the buyer of ag products to set a ceiling (maximum) buying price and protect themselves from price increases. At the same time, they retain the ability to take advantage of price decreases. The cost of these prices is an option premium, which the option buyer pays. Rather than buying the option to protect yourself from an unfavourable price change, sometimes you may find it attractive to sell the option.

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Commodity Market Trading and Investment: A Practitioners Guide to the Markets by Tom James

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