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February 17th, 2017 Newsletter

Presidents day trading hours, gold outlook and educational article about selling option premium


February 17th, 2017 - Issue #864

In This Issue

1. Futures Trading 202: Selling (Writing) Options on Futures
2. Hot Market: Gold Trending Higher, Bulls In Technical Control
3. Economic Calendar

President's Day Holiday Trading Schedule - Enjoy the Holiday!!

1. Futures Trading 202: Selling (Writing) Options on Futures

From our friend Jim Wyckoff at JimWyckoff.com

There are old sayings in the futures industry that go something like this: "Eighty percent of all options on futures expire worthless." And, "The only way to make money trading options on futures is to sell them--not buy them." Neither one of these statements is accurate. This educational feature will focus on the advantages and disadvantages of selling (also called "writing") options on futures.

But before I discuss writing options on futures, let me first elaborate on the first "old saying" that 80% of options on futures expire worthless. While I have heard the saying many times through the years, I have seen very few credible statistics on the percentage of futures options "that expire worthless." Consider this: If a trader hedges his straight futures positions with options purchases, and those options do perform their function of limiting risk for a period of time, then those options have performed their intended function--even though they may expire "worthless." Also, most speculative options buyers who make profits on trades do sell their options before they ever expire. Thus, I expect it would be very difficult to have accurate statistics on the number of futures options that are bought and sold that did not successfully fulfill their intended purpose.

A major appealing factor for speculative traders to sell (or write) options, as opposed to purchasing options, is that the odds are more favorable for producing a winning trade. Reason: If a trader is writing options, generally the market can move "against" the trader by a certain amount before the trader sees his option's strike price hit and he starts to lose money. Also, the option writer has "time decay" working in his favor--meaning that the day the option is sold, its time premium starts to decay as the option moves toward expiration. Now you might be thinking this options-writing stuff all sounds pretty easy, huh? Well, hold on just a minute! Remember that there are trade-offs in every aspect of trading futures.

Here's the "rub" with selling options:

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2. Hot Market: Gold Trending Higher, Bulls In Technical Control

From our friend Jim Wyckoff at JimWyckoff.com

Click on image below to enlarge

gold futures; "The trend is your friend." Gold bulls are enjoying a price uptrend in the yellow metal. There has been some safe-haven demand recently, amid uncertainty regarding the policies of the new U.S. president and the specter of currency market turmoil that could develop if the U.S. names major countries as "currency manipulators." Stay tuned! Stay tuned! Make 2017 a great year!!

3. Economic Calendar

Source: Moore Research Center, Inc.

Date Reports Expiration & Notice Dates
02/17
Fri
9:00 AM CST - Leading Indicators(Jan)


FN: Mar Coffee(ICE)
LT: Feb Nikkei Options(CME)
Feb Russell Options(CME)
Mar Orange Juice Options(ICE)
02/20
Mon
PRESIDENT'S DAY





02/21
Tue
2:00 PM CST - Milk Production


LT: Mar Crude Lt(NYM)


02/22
Wed
6:00 AM CST - MBA Mortgage Purchase Index
9:00 AM CST - Existing Home Sales(Jan)
3:30 PM CST - API Energy Stocks
FN: Mar Cotton(NYM)


02/23
Thu
7:30 AM CST - Initial Claims-Weekly
8:00 AM CST - FHFA Housing Price Index(Dec)
9:30 AM CST - EIA Natural Gas Report
10:00 AM CST - EIA Petroleum Status Report
2:00 PM CST - Dairy Products Sales
2:00 PM CST - Cold Storage(& Annual)
3:30 PM CST - Money Supply
FN: Mar Crude Lt(NYM)
LT: Mar Copper Options(CMX)
Mar Gold Options(CMX)
Mar Silver Options(CMX)
Mar Natural Gas Options(NYM)
Mar RBOB & ULSD Options(NYM)
02/24
Fri
7:30 AM CST - USDA Weekly Export Sales
9:00 AM CST - New Home Sales(Jan)
9:00 AM CST - Michigan Sentiment-Final(Feb)
2:00 PM CST - Cattle On Feed
LT: Feb Copper(CMX)
Feb Gold(CMX)
Feb Silver(CMX)
Feb Palladium(NYM)
Feb Platinum(NYM)
Mar Natural Gas(NYM)
Mar 2,5,10 Year Notes Options(CBT)
Mar Bonds Options(CBT)
Mar Canola Options(CBT)
Mar Wheat Options(CBT)
Mar Corn Options(CBT)
Mar Oats Options(CBT)
Mar Rough Rice Options(CBT)
Mar Soybeans,Soymeal,Soyoil Options(CBT)
02/27
Mon
7:30 AM CST - Durable Orders(Jan)
7:30 AM CST - Durable Goods Ex-Transportation(Jan)
9:00 AM CST - Pending Home Sales(Jan)
2:00 PM CST - Trout Production
FN: Mar Natural Gas(NYM)


02/28
Tue
7:30 AM CST - GDP-Second Estimate(Q4)
7:30 AM CST - GDP Deflator-Second Estimate(Q4)
8:45 AM CST - Chicago PMI(Feb)
9:00 AM CST - Consumer Confidence(Feb)
3:30 PM CST - API Energy Stocks
FN: Mar 2,5,10 Year Notes(CBT)
Mar Bonds(CBT)
Mar Copper(CMX)
Mar Gold & Silver(CMX)
Mar Platinum & Palladium(NYM)
Mar Canola(CBT)
Mar Wheat(CBT)
Mar Oats(CBT)
Mar Corn(CBT)
Mar Rough Rice(CBT)
Mar Soybeans,Soymeal,Soyoil(CBT)
LT: Feb Butter(CME)
Feb Milk(CME)
Feb Fed Funds(CME)
Feb Live Cattle(CME)
Mar RBOB & ULSD(NYM)
Mar Sugar-11(ICE)
Feb Butter Options(CME)
Feb Milk Options(CME)
Feb Fed Funds Options(CME)
Mar Lumber Options(CME)

03/01
Wed
6:00 AM CST - MBA Mortgage Purchase Index
7:30 AM CST - Personal Income & Spending(Jan)
7:30 AM CST - PCE Prices-Core(Jan)
9:00 AM CST - Construction Spending(Jan)
9:00 AM CST - ISM Index(Feb)
9:30 AM CST - EIA Pertroleum Status Report
1:00 PM CST - Auto & Truck Sales(Feb)
1:00 PM CST - Fed's Beige Book(Mar)
2:00 PM CST - Dairy Products Sales
FN: Mar Orange Juice(ICE)
Mar Sugar-11(ICE)

03/02
Thu
7:30 AM CST - USDA Weekly Export Sales
7:30 AM CST - Intial Claims-Weekly
9:30 AM CST - EIA Natural Gas Report
3:30 PM CST - Money Supply
FN: Mar RBOB & ULSD(NYM)


FN=First Notice, OE=Option Expiration, LT=Last Trade

Disclaimer: This calendar is compiled from sources believed to be reliable. Moore Research Center, Inc. assumes no responsibility for any errors or omissions. It is meant as an alert to events that may affect trading strategies and is not necessarily complete. The release dates for certain economic reports may have been rescheduled.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

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