Trading and Hedging with Agricultural Futures and Options
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This clear,concise,and practical guide explains how to use agricultural options as a safe,effective component of any trading portfolio. Outlining different strategies based on whether traders are seeking to reduce risk,increase income,or control costs it provides nuts-and-bolts examples and techniques for effective use of these versatile tools. It also covers option basics,special software,the differences between hedging and trading strategies,understanding price behavior and the importance of volatility,and more. Today's Premier Guidebook for Understanding Agricultural Options and Making Them a Key Part of Your Trading and Risk Management StrategyAgricultural futures and options represent a vital niche in today's options trading world. Trading and Hedging with Agricultural Futures and Options takes an in-depth look at these valuable trading tools,and presents clear,proven strategies and techniques for both hedgers and traders to achieve their goals while minimizing risk. Relying on nuts-and-bolts techniques and examples as opposed to the mathematical models and theory favored by other options-trading manuals this practical,hands-on book discusses many topics,including: How hedgers and traders can use options effectively with realistic expectationsMethods to understand price behavior including the "Greeks" (delta,gamma,vega,and theta)The importance of volatility and little-known ways to make it work to your advantage For producers and processors,agricultural futures and options are necessary components for controlling costs and hedging risks. For traders,they are proven vehicles for earning exceptional risk-adjustedprofits. Whichever side of the aisle you are on,Trading and Hedging with Agricultural Futures and Options will provide you with the answers you need to effectively use these versatile tools and make them an integral part of your business. Markets in commodity futures and options first arose and continue to exist as tools for commodity producers and commodity processors to manage risk. Along the way,traders and speculators discovered their value as instruments for producing consistently superior gains. For both groups,however,authoritative and understandable information has been difficult,if not impossible,to find. Trading and Hedging with Agricultural Futures and Options provides the information you need to get the most benefit from your trading program. Written by James Bittman,one of today's leading teachers and strategists on the effective use of futures and options,this long-awaited book is divided into three sections: The Basics of Futures and Options The vocabulary,mechanics,value components,and price behavior of these dynamic instrumentsHedging Strategies A five-step process illustrating fundamental strategies for both long and short hedgers,with a chapter devoted to advanced hedging strategiesTrading Strategies Explanations of how to develop realistic expectations and analyze trading alternatives,including use of the OP-EVALFTM computer program OP-EVALFTM Included in its entirety on the attached CD,this custom-designed,market-tested program helps you evaluate various alternatives and strategies and cuts weeks from your learning curve!Diagrams of basic hedging and trading strategies . . . Discussions of volatility and advanced option pricing topics . . . The role of delta,gamma,theta,and vega on price movement . . . Strategies and scenarios to profit from both rising and falling markets . . . Trading and Hedging with Agricultural Futures and Options will help traders and hedgers understand how agricultural options work,how they can be used to pursue specific hedging and trading goals,and what are the pros and cons of using individual techniques. Clear,concise,and practical,it explains every nuance of these unique and historically profitable instruments and is today's most comprehensive,easy-to-understand resource for all traders,regardless of their goals and objectives.
ForewordAcknowledgmentsDisclosuresIntroductionPt. 1The Basics of Futures and Options1Ch. 1The Terminology of Futures and Options3Ch. 2Diagrams of Basic Trading Strategies20Ch. 3Diagrams of Basic Hedging Strategies51Ch. 4Why Futures and Options Have Value70Ch. 5Option Price Behavior81Ch. 6Volatility96Ch. 7Option Price Behavior II: The Greeks117Pt. 2Hedging Strategies143Ch. 8Strategies for Long Hedgers145Ch. 9Strategies for Short Hedgers171Ch. 10Advanced Hedging Strategies195Pt. 3Trading Strategies223Ch. 11Pricing and Graphing Strategies with OP-EVALF225Ch. 12Buying Options244Ch. 13Selling Options265Ch. 14Vertical Spreads283Ch. 15Straddles and Strangles303Ch. 16Ratio Spreads320Ch. 17Conclusion334Index341
