Commodity Futures Trading Blog

Commodity Brokers Want Futures Trading Investors to Understand Why so Many Options Purchases Lose Money

Port St. Lucie, FL (PRWEB) August 20, 2006

T & K Futures believes that the two greatest enemies for futures traders who are option buying investors, besides themselves, are time decay and volatility premium. It amazes the company that many people have never heard of these key components of option value. Options are by their very nature a wasting asset. Given a flat market scenario, they lose premium value daily. The only way for an option purchaser to make money is for the value of the option premium to increase more relative to the time decay of that option.

What is volatility premium? When one buys and option (call/put), they are buying the right to buy or sell from an option grantor. They collect the premium that one pays for the option. They hope that the person loses because if that happens they win. This is the whole zero sum investment thing people have heard about. The option grantor takes on the lion’s share of the financial risk because while people are only liable for the premium that one pays for the option they are liable for the value of the contract.

So they increase the price of the option premium to offset their risk relative the volatility of the market. The more price movement in the futures market where people purchase an option, the more volatility risk the grantor is taking. In other words, the chances to reach strike price objectives are more attainable so the grantor charges more.

Past performance is not indicative of future results. Futures trading and option investments are risky and people can lose money. Use only risk capital when investing in futures or options.

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Commodity Futures Investing is On the Rise for Individual Investors.

(PRWEB) August 20, 2004

The Chicago Mercantile Exchange, the largest U.S. futures exchange, reported in July 2004 record trading volume, up 29% over prior years trading volume. The Chicago Board of Trade also reported record setting trading volume for the same period. According to Joe Fallico, principal broker at Insignia Futures and Options, “The playing field has now been leveled as the numbers of our clients that are “part-time” investors is sharply on the rise”. Commodity futures trading has become extremely popular in recent years due to several factors. Probably the number one reason for this growth is the readily available wealth of information on the subject of commodity futures investing found on the internet. Not too long ago, commodity futures trading was thought by many investors to be too complicated, too demanding and required great sums of capital to participate in. This is simply not the case, investing in commodity futures is very straightforward and is very similar to other forms of investments, particularly stocks. The same time demands found in trading stocks is typically equal to the time necessary to research commodity futures trades. Traditionally, commodity futures brokerage firms would require a minimum investment of ,000, ,000 or even more. In light of the overwhelming demand, Insignia Futures and Options has lowered their minimum investment to ,000 for investors interested in trading commodity futures.

Another main factor contributing to the explosive growth of commodity futures investors is the vast majority of commodity futures brokerage firms that now offer their clients on-line, electronic trading via the internet. Insignia Futures & Options offers two (2) state-of-the-art, electronic trading platforms that route their client’s orders directly to the appropriate futures exchange for execution within one second of order submittal. Insignia Futures & Options also provides the trading tools necessary to assist clients in their trading and investing strategies including quotes, charts, market reports, news and daily research.

Insignia Futures & Options is a discount and full service commodity futures brokerage firm and are members of the National Futures Association. Insignia Futures & Options specializes in providing both seasoned investors as well a beginning investors the assistance, support and tools necessary to help achieve their investment goals.

There is a risk of loss in futures trading.

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NFA Launches Online Learning Program to Help Investors Learn Opportunities and Risks Inherent in Trading Futures

Chicago, IL (Vocus) October 2, 2007

National Futures Association (NFA) announced today that it has developed an online learning program for individuals who want to learn about the opportunities and risks inherent in exchange-traded futures. Individuals can access the program through the Investor Learning Center section of NFA’s Web site (http://www.nfa.futures.org).

“With the increase in electronic trading capabilities and the introduction of new products, the futures markets are more accessible to individual investors who are looking for new risk management options,” says NFA’s Senior Vice President of Strategic Planning and Communication Karen Wuertz. “We have developed this training program to introduce futures trading to these individuals, stressing both the risks involved and the need for due diligence.”

The program is based on NFA’s publication “Opportunity and Risk: An Educational Guide to Trading Futures and Options on Futures.” The interactive, self-directed program consists of four modules explaining how futures contracts are traded, who regulates the U.S. futures markets, the various ways individuals can participate in futures trading and steps individuals should take before opening a futures trading account. The program also contains a series of quizzes to help reinforce basic concepts and a complete glossary of terms related to futures trading.

“NFA has always been committed to protecting investors in the futures markets,” says Wuertz, “and we believe that investor education is the key to investor protection. This new online learning program is the latest addition to our investor education initiatives.”

NFA has also produced an online learning program related to off-exchange foreign currency (forex) trading. All of NFA’s educational programs and publications can be found in the Investor Learning Center section of NFA’s Web site.

NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the derivatives markets.

For more information contact: Karen Wuertz (312) 781-1335, kwuertz @ nfa.futures.org Larry Dyekman (312) 781-1372, ldyekman @ nfa.futures.org

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