{"id":46,"date":"2022-10-19T20:34:37","date_gmt":"2022-10-19T20:34:37","guid":{"rendered":"https:\/\/www.e-futures.com\/blog\/?p=46"},"modified":"2022-10-19T20:34:59","modified_gmt":"2022-10-19T20:34:59","slug":"46-2","status":"publish","type":"post","link":"https:\/\/www.e-futures.com\/blog\/46-2\/","title":{"rendered":"Stop Getting Stopped? + Trading levels for 10.20.2022"},"content":{"rendered":"
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Stop Getting Stopped??<\/h3>\n

By Mark O’Brien, Senior Broker<\/p>\n

In our continued interest in assisting traders with strategy recommendations, here\u2019s another look at one that can give short-term futures traders staying power in volatile markets.\u00a0Any sound futures trading plan includes establishing the risk the trade will be taking \u2013 either in the form of a straight dollar amount, or a price point in the futures market you\u2019re trading.\u00a0The implementation of that plan typically involves the placing of a stop order to exit your futures position.\u00a0One challenge to this plan is that it can lead to continuous exits and reentries in the market and an ongoing recalculation of your risk.\u00a0This can be a repeated effort with mixed results, especially in volatile markets.<\/p>\n

What if you could set up a trade with a risk toleration similar to an amount you would take with any straight futures trade, but with a greater price toleration and the \u201ccost\u201d to this would be a slightly reduced profitability that becomes less impactful to your trade as its profit increases?<\/p>\n

I\u2019m describing the straightforward purchase of an option<\/a> that opposes the direction of your futures position.\u00a0Let\u2019s look at a timely example to paint a clearer picture.<\/p>\n

At this blog\u2019s writing the Dec. E-mini S&P 500<\/a> is trading at \u00b13705.00.\u00a0If a trader decided to take a short position in the market and further decided \u2013 based on whatever technical indicators they used for guidance or a simple dollar amount \u2013 a risk of $1250 was appropriate for the trade, that would call for a placement of a 25-point BUY STOP<\/a> order at 3730.00.\u00a0Note the volatility in the market today.\u00a0The Dec. E-mini S&P 500<\/a> has traded inside a nearly 100-point range (low = 3676.75 \u2013 high = 3774.25) and 3730.00 traded within the last few hours.<\/p>\n

Setting aside an exit price for the moment, let\u2019s look at an alternative strategy that involves entering the same short position at 3705.00 and at the same time incorporating the purchase of a 3705.00 call expiring tomorrow at 3:00 P.M., Central Time with a premium of \u00b125 points (\u00b1$1250).\u00a0With this option in place your risk tolerance has been set to $1250 for the duration of the option\u2019s lifespan, but your position\u2019s tolerance to an adverse price has no limit.\u00a0As far as an adverse move in the market your futures position might suffer, so too will the price of your option pay off.\u00a0No matter how adverse the move, the risk on the trade will remain $1250 \u2013 the cost of the option.<\/p>\n

The trade-off: by tomorrow at 3:00 P.M., Central Time, the market would have to move in favor of the position by at least the equivalent to the cost of the option (25 points), in order for the trade to begin profiting at the rate of a straight futures position.\u00a0The market needs to move favorably enough to cover the cost of the option before the trade can turn profitable.\u00a0Any favorable move by less than 25 points results in a commensurate reduction in the risk of the trade.\u00a0For example, if at 3:00 P.M., Central Time the market is trading at 3695.00, the 10-point profit in your futures position partially offsets the 25-point cost of the option, resulting in a loss of $750.00.<\/p>\n

The example above makes one important assumption, which is if the short futures position is below the option\u2019s strike price at 3:00 P.M., Central Time, it is liquidated.<\/p>\n

Also, you can adjust your risk depending on the opposing option<\/a> you select, up or down the strike price ladder and the option\u2019s expiration date.\u00a0Of course, you would consider the risk parameters of any futures \/ futures option combination that will give you the needed perspective a trade like this has.<\/p>\n

More on options here<\/a>\u00a0and specifically\u00a0weekly options here.<\/a><\/p>\n

As always, plan your trade and trade your plan.\u00a0Please contact your broker or Cannon Trading with any questions.<\/a><\/p>\n

Trader’s Checklist\u00a0Click below on the image to play the VIDEO<\/a><\/p>\n<\/div>\n

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Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.\u00a0 You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.<\/p>\n

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Futures Trading Levels<\/strong><\/h3>\n

10-20-2022<\/p>\n

\"#goldfutures
SP500 #ES_FNasdaq100\u00a0 #NQ_FDow Jones\u00a0 #YM_FMini Russell #RTY_FBitCoin Index #BRTI\u00a0SP500 Dec. Gold #GC_F Dec. Silver #SI_F Oct. Crude Oil #CL-F Dec. Bonds\u00a0 #ZB_F Dec. 10 yr\u00a0 #ZN_F Dec. Corn #ZC_F Dec.\u00a0 Wheat #ZW_F Nov. Beans #ZS_F Dec. SoyMeal #ZM_F Oct. Nat Gas #NG_F Dec. Coffee #KC_F Dec. Cocoa #CC_F\u00a0October Sugar #SB_F Dec. Cotton #CT_F Sept.\u00a0 Euro Currency<\/figcaption><\/figure>\n

Improve Your Trading Skills<\/h2>\n
Get access to proprietary indicators and trading methods,\u00a0consult with an experienced broker<\/a><\/div>\n
\u00a01-800-454-9572\u00a0Explore trading methods.\u00a0Register Here<\/a><\/div>\n

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Economic Reports, Source:\u00a0<\/strong><\/h3>\n

Forexfactory.com<\/a><\/p>\n

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This is not a solicitation of any order to buy or sell, but a current market view provided by\u00a0Cannon Trading Inc<\/a>. Any statement of facts\u00a0here in\u00a0contained are derived from sources believed to be\u00a0reliable,\u00a0but are not guaranteed as to\u00a0accuracy, 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\u00a0judgement\u00a0in trading.<\/p>\n","protected":false},"excerpt":{"rendered":"

Get Real Time updates and more on our private FB group! https:\/\/business.facebook.com\/groups\/1105191589938254\/   Stop Getting Stopped?? By Mark O’Brien, Senior Broker In our continued interest in assisting traders with strategy recommendations, here\u2019s another look at one that can give short-term futures traders staying power in volatile markets.\u00a0Any sound futures trading […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[3,4,5,17,16],"class_list":["post-46","post","type-post","status-publish","format-standard","hentry","category-e-futures-blog","tag-futures-options","tag-micro-emini-futures-options","tag-options-on-futures","tag-trading-strategy","tag-weekly-options"],"_links":{"self":[{"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/posts\/46","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/comments?post=46"}],"version-history":[{"count":2,"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/posts\/46\/revisions"}],"predecessor-version":[{"id":49,"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/posts\/46\/revisions\/49"}],"wp:attachment":[{"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/media?parent=46"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/categories?post=46"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.e-futures.com\/blog\/wp-json\/wp\/v2\/tags?post=46"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}