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Penny Stock Commodities Editor’s Note: Special guest essayist Nick Jones wraps up our series on commodity trading with a summation of what it takes to make these huge profits. As with penny stocks, these options give traders huge gains that Wall Street chooses to ignore. Take a look at what Nick has to say… What It Takes to Trade These Special Investments
“I will have realistic expectations. Even the best of traders are only human, and can look their worst when losing. I don’t expect to have only winning trades and realize that losing trades are just as integral a part of my performance as are the winners. “I realize that an investor’s emotions can be his or her own greatest enemy during drawdown periods. I will not allow myself to be victimized by my emotions like so many other investors. I refuse to be part of the herd! “I will think with my head and not my heart! I will stick to my original investment game plan that I agreed to when I opened my account. I will have patience, think long term, and stay tough! I’m not a fair weather investor.” Those words are the investor’s oath of our very own “Maniac Trader,” Kevin Kerr. Kevin, a Minnesotan like myself, has been investing in commodities options and futures for 17 years now. **********Until Midnight Only********** Double — Even Triple — Your Accounts in as Little as 3 Months It’s easy… Just meet the Trader-at-Large, who can turn $1,074 into $28,271 in under four months. He’s so good, he’ll even give you three free months to his special alert service. But you have to hurry. The offer ends tonight at midnight. Get it here… ******************************************* As you can see, the oath mentioned above can be very difficult to live by, especially in options. Why would someone play the options market? Simply put, options trading provides a very beneficial risk-reward scenario. Unlike futures, you can’t lose any more money than you put in, while the possible profit is limitless. Just look at the wheat market, for starters. The price of wheat has more than doubled on a year-over-year basis. The two main reasons for the price move was the poor weather we had this season, and the fact that the most acreage since World War II was dedicated towards corn production. This results in less acreage for other crops, like wheat. The people who were invested in wheat options made an absolute hauling. Let’s just look at one of Kevin’s many triple-digit gain options trades. The Maniac Trader’s July 2006 silver $13 call made a 400% profit. Oh yeah, did I mention that the trade was only open for 34 days? On one silver contract that cost $750, in 34 days, you could have sold it for $3,750. Not bad. So before we dig in, let’s look at some of the basics of the options market. First and foremost, an option is a contract that gives the buyer the right, but not the obligation, to buy or sell a specified quantity of a commodity or other instrument at a specific price within a specified period of time. The two basic transactions in the options markets are calls and puts. Essentially, a call is the right to buy a contract at a specific price and date, while a put is the right to sell a contract at a specific price and date. Some other terms that you will consistently hear in discussions regarding options are “in the money” and “out of the money.” This is a reference of the strike price, or option price, compared to the price that the commodity is currently trading at. If the strike price is above the current price of the option, it is considered out of the money (meaning a loss), and the opposite is true for an option being in the money (meaning a gain). But what do you look for when trading options? The markets for energy are ever growing and prevalent in today’s global economy. There are definitely huge profits to be made in the sectors of natural gas, crude oil and heating oil. But these markets are much more complicated than you think, so what do the “professional traders” watch in these markets? Starting off, he keeps a keen eye on the Energy Information Agency (EIA) and the American Gas Association’s (AGA) weekly reports of crude oil and natural gas supply and stock levels. He also checks extensively into global supply and demand fundamentals. An imbalance of supply and demand can lead to an awesome opportunity for profits in these volatile markets. Don’t forget about geopolitical risks, either. Discussing whether the tough rhetoric on Iran is just that, can be one of the most important factors regarding whether or not we might see a dramatic price swing one way or another. If that seems a little overwhelming to digest, I haven’t even discussed interpreting if any, or all, of the above-mentioned factors have been already priced into the markets. This might be one of the toughest things to do. The reason being that it almost takes an intuitive sense one can only acquire after 17 years of trading commodities. I’m not trying to intimidate you, but the point I really want to make is that although there is immense profit potential, it’s not as easy as connecting the dots. So how do the “experts” do it? Maybe it’s his Midwestern heritage, but Kevin Kerr knows his agricultural commodities. Reading weather report after weather report and crop report after crop report can be repetitious and boring, but that’s exactly what it takes to make money in these types of investments. Kevin understands the seasonal trends, and how a late drought or early frost will affect the prices of certain commodities. He knows the differences between cotton crops and why soy oil tends to follow the price of crude. Also, one of the most important notions of agricultural goods is the growth of developing nations and the desire of their citizens to increase their quality of life. The result of this trend is increased demand in all foods, especially meat. Just look at China’s food inflation. In August alone, it rose 6.5%. The main increase was that of pork which rose 49% due to shortages of the “other white meat.” These stories are consistent from China to India to Brazil. All of these factors and more have to be considered when trading commodity options. So even with the profit potential, it’s still a big job. Regards, P.S.: Honestly, it really is a full-time job to trade these commodity options. But when you can see gains like 60% in two days, 72% in eight days and 100% in 12 days, it’s worth it. Unfortunately, most people don’t have that kind of time. So, to help people trade these, we got one of the best, if not the best, in the industry — Kevin Kerr himself — to head a special investment service dedicated to only commodity trading. It’s called Resource Trader Alert, and we are currently running a very special deal. Our publisher has reduced the price from $1,495 to $1,125 only until tonight at midnight. With this deal, you get three months completely free and all the information to get you started. Kevin currently has eight open buy positions, but the way he trades, you may not have much time to act… To check it out, read this free report. It’ll explain it all. Click here… |
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