Further Grow

THE OPTIONS COURSE The Big Picture FUTURES To the novice, futures contracts can be quite confusing; yet they offer a unique opportunity to make money in today’s volatile markets. Futures markets consist of a variety of commodities (e.g., gold, oil, soybeans, etc.); financial trading instruments (e.g., bonds, currencies); indexes (e.g, S&P 500, Nasdaq 100); and most recently, single stock futures (Microsoft, Intel, Citigroup). A futures contract is the agreement to buy or sell a uniform quantity and quality of physical or financial commodities at a designated time in the future at a specific price. The contracts themselves are traded on the futures market. Futures markets gave rise to two distinct types of traders: hedgers and speculators. Hedgers consist primarily of farmers and manufacturers. Futures contracts were initially used by farmers and manufacturers to protect themselves or lock in prices for a certain crop or product cycle.  Hence, hedgers are primar

THE OPTIONS COURSE The  Big  Picture Trading involves a variety of different in vestment vehicles in addition to options: stocks, futures, commodities,  exchange-traded funds (ETFs), and indexes. These financial instru ments can be assembled in an infinite number of combinations. My own  trading focuses on stocks and options. Yet, an appreciation of all these  tools can help build an integrated understanding of what is happening day  to day in the financial marketplace. So, let’s take a closer look at the funda mental components of each investment vehicle to see how one differs  from the other. STOCKS Those of you just starting in the field of investment have most likely heard  about one popular financial instrument: the stock. In fact, thousands of  stocks are traded on the U.S. stock exchanges every day. But what exactly  is a stock? Basically, a stock is a unit of ownership in a company. The value  of that unit of ownership is based on a number of factors