Trading Futures Can Be A Lot Easier (And Fun) Than You Thought
So, if you ever listen to CNBC in the morning, you’ll hear about the futures markets, fair value and all that good stuff. But most of us regular folk avoid the futures markets, as you need special investment accounts, knowledge and are fearful of having to take custody of several pork bellies if your bet goes wrong. Well, now there’s an alternative with interesting capabilities. Want to bet on whether or not we’ll take action against Iran (a 3rd simultaneous war?) or N Korea (a 4th)? Although seemingly outlandish, these are actually great hedges against the general bull market that’s occurring now. Obviously, if launch an overt attack on either of these countries to disable their nuclear capabilities, it will not be good for the market short term (although oddly, wars are very good for the economy longterm - future post). Want to bet against bird flu and couple that with a company working on the vaccine?
The way it works is that everything’s based on a 100% contract. If you sell the Iran air strike contract for 20 and have serious doubts that it will happen, as the data approaches expiry (Dec07 in this case), the contract will be worth less and less until it expires and you will have collected $20. If the unthinkable happens, well you’re out 80. But perhaps you were short the market, so this is a reverse hedge. Either way, it can be quite entertaining and provide for some nice recurring income if you’re revisiting every couple months. There’s politics, entertainment, and then for all you conventional investors out there, there’s actually market indices and more. Setting up an account is easy and the commissions are inexpensive.
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