Author: The INO.com Team

To Exercise, Or Not To Exercise (Options), That Is The Question

Posted on by The INO.com Team

In a previous article, I explained commodity option expiration, exercising, and assignment. I noted a long (purchased) option position (call or put) has the right to exercise the contract. To make an informed decision, I will explain the result of exercising an option contract.

A commodity option contract is a decaying asset that will expire. As an option contract draws near its expiration date, set by the exchanges, both the time value and intrinsic value diminish. Time value is premium in relation to days until expiration. Intrinsic value is the premium in relation to the strike price’s distance from underlying futures contract price. Note that volatility will also play a role in the calculated premium price. The exception to intrinsic value diminishing is an in-the-money contract. At that point, the intrinsic value is a one-to-one ratio of the strike price in relation to the underlying futures contract. For example, a long April 2013 Gold 1600 call will be valued at 50 points (or $5,000) if futures are at 1650.0 on option expiration (March 25, 2013). On the other hand, if futures are at 1600.0 or below on expiration, the option contract is valued at zero. An in-the-money contract, before expiration, will also have time value included in the premium price. However, because there are a number of finite days until expiration, the time value diminishes from day one. Continue reading "To Exercise, Or Not To Exercise (Options), That Is The Question" →

Today's Video Newsletter: I have two major concerns today

Posted on by The INO.com Team

Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Monday, the 25th of February.

In addition to the markets we normally report on, we will also be looking at the following markets using our Trade Triangle technology.

#1 MAJOR CONCERN
My number one concern, much like everyone else here in America, is the sequester on March 1st. This date is rapidly approaching and neither the Democrats nor the Republicans seem ready to compromise on this major challenge. The game of political chicken has been lifted to a whole new level of brinkmanship here the US. I am not sure that is in the best interest of the markets or the country. With the DOW and the NASDAQ indecisive at the moment, investors are losing confidence as they still feel shaky and have strong memories of 2008. Only the S&P remains in a positive mode and this is the one to watch carefully, in my opinion. Should this index breakdown and start moving lower, investors are likely to bolt for the exit doors. Continue reading "Today's Video Newsletter: I have two major concerns today" →

Gold Chart of The Week

Posted on by The INO.com Team

Each Week Longleaftrading.com will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.

Weekly Gold Report (February 25th through March 1st)

It was a gut wrenching week for those who stayed long practically anything outside of the US Dollar or the Soybeans last week. Most commodity prices saw their fair share of selling mid-week after it was rumored that a large commodity fund was taking gains in a few markets to defend another large position that they found themselves on the wrong side of. While the name of the fund or the positions are still unknown, I can only guess the fund was taking gains in long positions in the Crude Oil to defend long positions in the Metals. On Wednesday, the Crude Oil Futures took a bath early in the session and selling pressure even carried over into the Thursdays trade before consolidating on Friday. Other commodities were pressured throughout the week as the US Dollar rallied ahead of the release of last months FOMC Minutes. There was nothing particularly shocking about the report as traders expected to hear that FED officials would still be at odds regarding the duration of Quantitative Easing. On top of this release, the market also had to deal with politicians in Washington, who began their media smearing of one another regarding the upcoming Sequester, which must be decided by March 1st. Continue reading "Gold Chart of The Week" →

Poll: 5 days and counting

Posted on by The INO.com Team

On March 1st (Friday) Sequestration is set to start and I wonder if our government is doing everything they can to avoid it. What do you think?

Do you think the president and lawmakers are doing enough to avoid the sequester?

View Results

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Weekly Futures Recap W/Mike Seery

Posted on by The INO.com Team

We’ve asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.

Grain Futures-- Grain futures were mixed this week in a volatile trade with soybeans higher again for the 5th straight day up 28 cents at 14.83 in early trade only then to sell off tremendously to finish lower by 24 cents for the session closing at 14.31 after hitting a new 5 month high this Friday all due to the fact that the Argentina soybean crop was reduced 5% this week down from 53 MMT all the way to 50 MMT sparking massive short covering and now the large speculators getting long this market to the upside. Last Friday soybeans for the July contract settled at 13.99 having one of its best weekly gains in quite some time while corn futures are still below their 20 & 100 day moving average in the March contract settling at 6.95 last Friday basically unchanged for the trading week in a sideways pattern with major support at the 8 month lows at 6.80 and as I’ve stated in many previous blogs I am bearish the corn and wheat market and the soybean market is extremely choppy with many false breakouts including today. Continue reading "Weekly Futures Recap W/Mike Seery" →