Why do futures prices converge on spot prices during the delivery month?
Prior to expiry, the price of futures contracts will most likely either be at a premium to the physical or a discount. As the contract approaches expiry these two prices will converge, or meet. Why does this happen? There are a number of factors involved here; one of the main reasons is what’s called cost…
Can the futures market predict if the Australian sharemarket will open higher or lower?
Investors use the futures market to predict whether the Australian sharemarket will open higher or lower on a daily basis. This can be achieved in several ways including reviewing offshore futures contracts, in markets like Europe and the United States to see how particular stock indices, including the FTSE and the S&P500 traded overnight. In…
Before you start trading options – ask yourself these 5 questions
When I started trading, I merely focused on what I was going to buy with all the money I planned on making. Needless to say, the money went within my first 6 months of opening an account. What happened? Well, as they say, a fool and his money are soon parted. I was a fool…
Can I buy an option that lasts for two or three years?
This is most certainly true. Most optionable stocks have longer term option contracts, some of which do not expire until December 2011. In reference to a starting point an investor always needs to reflect on their trading objectives, or views as this will always form the basis of their trading strategy. Keeping in mind that…
Capitalising on price movements in reporting season
I am currently a new trader and I’m playing the Sharemarket Game and over the weeks I closely analyzed all the companies. To my complete surprise one of the companies (Downer EDI) went from -0.81% on the 20 Feb to 14.29% on the 21 Feb and there were no announcements prior to this. The day…
Trading the top 200 Aussie stocks with an eye on the SPI or the XJO, but never both
I have been trying to understand why the SPI and XJO follow the same intraday and daily trajectory. I have asked a number of people but have not yet obtained a satisfactory answer. On any given trading day a multitude of people trade the top 200 Australian stocks, with little or no concern for the…
Climate change and consumers: hot air or real deal?
At present, when what Australians say they will do to help the environment is laid side-by-side with what they actually do, there is definitely a gap. However, if you’re developing or marketing goods and services with a green hue, the gap looks to close over time and there may be more customers who are willing…
Use these 5 ratios to unearth superior stocks
We all want to find the next Rio Tinto, but long before it’s trading at $100 a share, or Google when it was a tiny IT company with only a vision. But how do we know that a company will be a superior player over the long haul? What key ratios unlock the secret to…
As share investors head for the exit, forex trading is booming
Trading the foreign exchange market is a tough gig, but those who learn the art of trading the biggest and most unruly market in the world can reap big rewards. However be warned – the volatility and leverage involved in trading foreign exchange can make for a wild ride. Kunal Sharma, managing director of Melbourne-based…
