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I am beginning to see signs of people taking money out of their futures
accounts, reducing their trading size for managed accounts and generally
positioning themselves for the end of the year.
This will not help liquidity. In fact, year end profit taking and squaring
accounts, combined with traders on the sidelines for Y2K related reasons,
could find some air pockets in the markets as trends reverse for profit
taking and no other reason.
Thus, I think that if a trader is in a long term trend position in Wheat and
Oats, or any market, and intends to keep the position through the end of the
year, they should consider using options to capture some profit and limit
risk.
I have a high degree of confidence that there will be no Y2K disaster.
However, I think it is prudent to not take excessive risk in a potentially
explosive situation. Thus, I am for hedging my positions with options if I
intend to stay in the futures positions.
Personally, I have not detected any scenario change which would suggest a
reversal in trend in the grains.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it!
Disclosure: John J. Lothian is the President of the Electronic Trading
Division of The Price Futures Group, Inc., an Introducing Broker.
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