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Don, sorry I was not able to respond to you sooner. There are a lot of
strategies that the futures trader can use to reduce risk without overly
reducing reward by using options.An expert in this area is mentioned on that
site I previously cited.. His name escapes me as I write this . Also, I
would like to mention that in this business we are in one never stops
learning , that's one of the reasons I love it( of course that's not the
only reason)
Dom
----- Original Message -----
From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Sunday, December 10, 2000 5:32 PM
Subject: Re: [RT] Re: Trading Events
> Dom,
> A definite advantage to Ira's and your suggestions is that you are a
player
> no matter which way it goes.
>
> And like I said my news reversal only works if something . .well
reverses,
> immediately.
>
> I have a book Options as a Strategic Investment I once read probably 10
> years ago but as I recall it does not deal with option/future
combinations.
> Are there any suggestions on a better book from anyone? (I am looking at
the
> website suggested by you also Dom).
>
> I don't know if this question should be limited to just futures traders
but
> are those of us that are not actively using options strategies in
> combination with futures trading, totally missing the boat (ala better
> opportunity and less risk)? (Six year veteran here trading futures, one
year
> selling options (never have bought any)).
> don ewers
> ----- Original Message -----
> From: "Dom Perrino" <domenick@xxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxx>
> Sent: Sunday, December 10, 2000 2:02 PM
> Subject: Re: [RT] Re: Trading Events
>
>
> > Don, I know exactly what you mean.One of the best ways to catch those
big
> > short term moves would bring us back to your original thought regarding
> use
> > of options and other strategies some of which were mentioned by Ira.One
of
> > the least complex strategies to catch a big move prior to release of
> > important economic figures ,cpi, ppi, employment etc. would be to buy a
> > straddle on the instrument we think is going to make a big move but we
> want
> > to limit risk and be on the right side whether the big is up or down .
> >
> > If the move is substantial we would exit the put or the call at a
profit
> > thus recovering the cost of both the call and the put. In, addition, we
> > would still have either the put or the call in our possession. This
would
> be
> > a freebie and we could unload it if a quick reversal occurs. In any
event
> > since we already recovered its cost we could just sell it since it
served
> > its purpose. The major problem with the straddle is that it can be
> expensive
> > especially if you stick to the true definition of a straddle i.e. same
> > strike price A good way to reduce the cost would be to buy the call and
> put
> > 5 points away from the current price of the instrument Hope this is
more
> on
> > your point.
> > Regard,
> > Dom . .
> > ----- Original Message -----
> > From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
> > To: <realtraders@xxxxxxxxxxx>
> > Sent: Sunday, December 10, 2000 2:17 PM
> > Subject: Re: [RT] Re: Trading Events
> >
> >
> > > Dom,
> > > I think we are on the same page, because in your scenario there is no
> > "news
> > > reversal" the exist trend continues. The other thing to keep in mind
is
> > the
> > > type of trades I am discussing are very short term in nature, a few
> hours
> > to
> > > a day at best. Kind of like a capitulation.
> > > don ewers
> > > ----- Original Message -----
> > > From: "Dom Perrino" <domenick@xxxxxxxxxxxx>
> > > To: <realtraders@xxxxxxxxxxx>
> > > Sent: Sunday, December 10, 2000 11:08 AM
> > > Subject: Re: [RT] Re: Trading Events
> > >
> > >
> > > > Don, I basically agree that reaction to news is more important (or
at
> > > least
> > > > as important ) than the news itself. However, I have noticed on many
> > > > occassions that looking at a chart prior to a major news event the
> > > > chart(whatever the entity) indicated that if it was on a sell
negative
> > > news
> > > > came out and the news confirmed the chart. The reverse for positive
> > > > news.Even if this is not always the case, a glance at the chart of
the
> > > > entity you are trading will be of help or at least increase the odds
> in
> > > your
> > > > favor when making a decision .The "Markets" seem to take on a mind
of
> > > their
> > > > own . The participants individually don't know but when the crowd
> > becomes
> > > > one ,it forms the mind of the market , and this mind knows all that
> is"
> > > > knowable"
> > > > Dom
> > > > ----- Original Message -----
> > > > From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
> > > > To: <realtraders@xxxxxxxxxxx>
> > > > Sent: Sunday, December 10, 2000 11:07 AM
> > > > Subject: Re: [RT] Re: Trading Events
> > > >
> > > >
> > > > > Dan,
> > > > > Sure it really quite simple a simple trade to understand and not
my
> > own
> > > (a
> > > > > fellow trader shared it with me). Basically it is the
> acknowledgement
> > > > that
> > > > > the "news or trading event" is already discounted in the price of
> the
> > > > > commodity. A reaction to the news occurs, but then the reaction
> > quickly
> > > > > fails. Grain traders use it frequently on a grain report day but
> the
> > > > bonds
> > > > > and SP's with the current volatility are other good places to
watch
> > for
> > > "a
> > > > > news reversal trade".
> > > > >
> > > > > It is also discussed in the Raschke/Conners book "Street Smarts" I
> > > think,
> > > > > which may have been the trades origin, or at least documented.
> > > > >
> > > > > Basically when a market moving event is about to happen you note
the
> > > price
> > > > > of the underlying commodity, then after the commodity reacts to
the
> > > event
> > > > ,
> > > > > lets say up for example, you place a sell stop at the price the
> > > commodity
> > > > > was at "before the event". If the commodity trades back down to
that
> > > price
> > > > > you go short. They actually happen quite frequently.
> > > > >
> > > > > Here is an example, it is widely expected (or maybe not) that the
> crop
> > > > > report might show less yield, smaller acreage, larger exports
> whatever
> > > for
> > > > > soybeans. The price prior to the report (the previous day because
> crop
> > > > > reports are at 7:30 am as I recall) had a range of $5.05 to $5.10
> > > closing
> > > > at
> > > > > $5.08. The report comes out and beans when they open at 9:30 am
gap
> or
> > > > trade
> > > > > up to $5.21. At that point you would place a sell order at $5.10
and
> > if
> > > > > beans trade back into the previous days range you go short with a
> stop
> > > at
> > > > > the gap high or a money stop whichever works with the risk you
wish
> to
> > > > take.
> > > > > Exit the trade (hopefully profitably) using any number of profit
> > taking
> > > > > techniques. The reversal in the commodity occurred because a
> majority
> > > of
> > > > > the news was already in the price prior to the news. When the news
> > came
> > > > out
> > > > > a few people/traders react to it only to find out that most people
> are
> > > > ready
> > > > > to take their profits after the initial reaction. This profit
> taking
> > is
> > > > the
> > > > > reason the price declines and if it trades back into the prior
range
> > > > > increased selling occurs from those who were recently long hoping
> for
> > a
> > > > > positive reaction.
> > > > >
> > > > > Several other examples happened this past Friday. Some people
were
> > long
> > > > the
> > > > > SP in the afternoon prior to the two court rulings around 1395
> feeling
> > > it
> > > > > may go Bush's way. The ruling came out and the spoos rallied to
> 1404,
> > > if
> > > > a
> > > > > sell stop was placed at 1395 you would have gone short and they
> traded
> > > > back
> > > > > down to 1388 area. The bonds were another example opening at 7:20
at
> > > > 103-21
> > > > > and prior to the employment report they were around 103-25ish (a
> > bullish
> > > > > report was expected), the report came out the bonds traded to
> 103-31,
> > at
> > > > > that point place a sell order at 103-25 or slightly below since
the
> > > range
> > > > > was tight. The report was not as bullish as expected, there was a
> > slight
> > > > > reaction up, then profit taking set in.
> > > > >
> > > > > The news reversal is simply buy the rumor sell the fact or sell
the
> > > rumor
> > > > > buy the fact which may explain Intel's short term reaction to bad
> > news.
> > > > > "That warn" was already in the price of the stock, it was not a
> > surprise
> > > > to
> > > > > most. Hope this all helps. Like I said they happen all the time.
> Said
> > > > simply
> > > > > "it is not the news but the reaction to it that is important".
> > > > > don ewers
> > > > >
> > > > > ----- Original Message -----
> > > > > From: "Dan Cash" <dcash@xxxxxxxxxxxx>
> > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > Sent: Saturday, December 09, 2000 9:17 PM
> > > > > Subject: Re: [RT] Re: Trading Events
> > > > >
> > > > >
> > > > > > Don,
> > > > > >
> > > > > > Do you mind expanding on your trading news reversal technique in
> any
> > > > > detail you
> > > > > > care to, I would appreciate the insight?
> > > > > >
> > > > > > Dan
> > > > > >
> > > > > > Don Ewers wrote:
> > > > > >
> > > > > > > Ira,
> > > > > > > Can you enlighten us with an example, since I only trade,
"what
> > are
> > > > > billed
> > > > > > > as major event s" from the "news reversal trading technique".
> > > > Obviously
> > > > > your
> > > > > > > expertise utilizing options would be a welcome trading
technique
> > > that
> > > > we
> > > > > may
> > > > > > > be able to learn from. I normally go flat ahead of these
events
> > > > feeling
> > > > > it
> > > > > > > is gambling in lieu of trading, so I am anxious to hear your
> > reply.
> > > > > > > don ewers
> > > > > > > ----- Original Message -----
> > > > > > > From: "Ira Tunik" <ist@xxxxxx>
> > > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > > Sent: Thursday, December 07, 2000 1:22 AM
> > > > > > > Subject: Re: [RT] Dow
> > > > > > >
> > > > > > > > If one is just trading the underlying, then a cardinal rule
> > should
> > > > be
> > > > > to
> > > > > > > be out
> > > > > > > > of the markets when major announcements are to be made. If
you
> > > know
> > > > > how to
> > > > > > > > utilize options in volatility positions that are non
> > directional,
> > > > then
> > > > > you
> > > > > > > put
> > > > > > > > on these positions just before announcements are made and
> trade
> > > the
> > > > > > > volatile
> > > > > > > > swings with glee. The bonds are a classic example of where
> this
> > > > works
> > > > > > > > wonderfully. There is sufficient liquidity in both the
options
> > and
> > > > > > > underlying
> > > > > > > > bonds to allow one to trade some of the huge swings the
bonds
> > are
> > > > know
> > > > > to
> > > > > > > make.
> > > > > > > > Ira.
> > > > > > > >
> > > > > > > > Don Ewers wrote:
> > > > > > > >
> > > > > > > > > Dom, all-,
> > > > > > > > > True, but one should not neglect events that "make the
> > charts",
> > > > > meaning
> > > > > > > > > sometimes charts say one thing and an event and the price
> > > reaction
> > > > > to
> > > > > > > it,
> > > > > > > > > makes the chart say quite another and therefore a
different
> > > story
> > > > > > > unfolds.
> > > > > > > > > We need to be flexible enough in our trading to
accommodate
> > > this.
> > > > > Charts
> > > > > > > > > rule until they fail, one good reason depending on your
> > trading
> > > > > > > timeframe to
> > > > > > > > > avoid major events that have been built up to be market
> > movers.
> > > It
> > > > > is OK
> > > > > > > to
> > > > > > > > > stand aside at times and let the story be told?
> > > > > > > > > don ewers
> > > > > > > > >
> > > > > > > > > ----- Original Message -----
> > > > > > > > > From: "Dom Perrino" <domenick@xxxxxxxxxxxx>
> > > > > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > > > > Sent: Wednesday, December 06, 2000 9:46 PM
> > > > > > > > > Subject: Re: [RT] Dow
> > > > > > > > >
> > > > > > > > > > My belief is that technical analysis already reflects
> > ALL,that
> > > > is
> > > > > > > known
> > > > > > > > > > about a stock including all fundamental factors. I
believe
> > > that
> > > > is
> > > > > the
> > > > > > > > > > standard belief of technicians. It seems that is what
you
> > are
> > > > also
> > > > > > > saying.
> > > > > > > > > > My original email to Bob may have been ambiguous.
> > > > > > > > > > Dom ----- Original
> > > > > Message -----
> > > > > > > > > > From: "Ira Tunik" <ist@xxxxxx>
> > > > > > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > > > > > Sent: Wednesday, December 06, 2000 10:03 PM
> > > > > > > > > > Subject: Re: [RT] Dow
> > > > > > > > > >
> > > > > > > > > >
> > > > > > > > > > > Those factors would all have been factored in before
you
> > > > > selected
> > > > > > > the
> > > > > > > > > > stock to
> > > > > > > > > > > trade. They would be terrible if you were looking for
a
> > > short
> > > > > in a
> > > > > > > down
> > > > > > > > > > market
> > > > > > > > > > > and they would be wonderful if you were looking for a
> > stock
> > > to
> > > > > trade
> > > > > > > in
> > > > > > > > > an
> > > > > > > > > > up
> > > > > > > > > > > market. After the selection, you would trade it
> > > technically.
> > > > > Ira
> > > > > > > > > > >
> > > > > > > > > > > Dom Perrino wrote:
> > > > > > > > > > >
> > > > > > > > > > > > Bob,
> > > > > > > > > > > > In your opinion,what would you consider key
> differences
> > > > > between a
> > > > > > > > > > technician
> > > > > > > > > > > > and a fundamentalist ( like yourself ) if both let
the
> > > > market
> > > > > tape
> > > > > > > > > call
> > > > > > > > > > the
> > > > > > > > > > > > shots on a day to day basis, and, as you well put
it,
> > > > keeping
> > > > > the
> > > > > > > > > > account
> > > > > > > > > > > > healthy.
> > > > > > > > > > > > It would seem to me that the technician would have
an
> > > easier
> > > > > job
> > > > > > > since
> > > > > > > > > > on a
> > > > > > > > > > > > short term basis p/e, book value,sales, balance
sheet,
> > > > current
> > > > > > > ratio
> > > > > > > > > > > > etc.would not need to be factored into the trade .
> > > > > > > > > > > > Dom
> > > > > > > > > > > >
> > > > > > > > > > > > ----- Original Message -----
> > > > > > > > > > > > From: "Bob" <bobskc@xxxxxxxxxxxx>
> > > > > > > > > > > > To: <realtraders@xxxxxxxxxxx>
> > > > > > > > > > > > Sent: Wednesday, December 06, 2000 1:21 PM
> > > > > > > > > > > > Subject: Re: [RT] Dow
> > > > > > > > > > > >
> > > > > > > > > > > > > An elitist? I hope not and I certainly hope that
> you
> > > > detect
> > > > > a
> > > > > > > man
> > > > > > > > > who
> > > > > > > > > > > > > doesn't send insulting comments about someone he
> knows
> > > > > nothing
> > > > > > > > > about.
> > > > > > > > > > > > >
> > > > > > > > > > > > > As to the content of my mail, I was trying to
state
> > that
> > > > as
> > > > > long
> > > > > > > as
> > > > > > > > > > > > > liquidity and beta are the principal drivers of
the
> > nas
> > > > > while
> > > > > > > value
> > > > > > > > > > and
> > > > > > > > > > > > > common sense take a back seat, all gains should be
> > > viewed
> > > > as
> > > > > > > > > temporary
> > > > > > > > > > and
> > > > > > > > > > > > > unsustainable. As to "burning flesh", I don't
care
> > > which
> > > > > way
> > > > > > > this
> > > > > > > > > > market
> > > > > > > > > > > > > goes as long as it goes .. I let the market tell
me
> > what
> > > > to
> > > > > do
> > > > > > > on a
> > > > > > > > > > day to
> > > > > > > > > > > > > day basis and I don't fight the tape. My account
is
> > > > healthy
> > > > > ..
> > > > > > > I
> > > > > > > > > hope
> > > > > > > > > > > > > yours is as well.
> > > > > > > > > > > > >
> > > > > > > > > > > > > Bob
> > > > > > > > > > > > >
> > > > > > > > > > > > > At 03:35 AM 12/6/2000 -0500, you wrote:
> > > > > > > > > > > > > >Bob,
> > > > > > > > > > > > > > I've been a student/investor for many
years.
> > > > Sounds
> > > > > to
> > > > > > > me
> > > > > > > > > like
> > > > > > > > > > > > you've
> > > > > > > > > > > > > >become "insulted" that the mob out there doesn't
> have
> > > > your
> > > > > > > > > > intelligence
> > > > > > > > > > > > and
> > > > > > > > > > > > > >prescience.
> > > > > > > > > > > > > >
> > > > > > > > > > > > > > Do I detect the burning flesh of an
elitist?
> > > > > > > > > > > > > >
> > > > > > > > > > > > > >
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