Today’s Commodity Trading Advisor is no longer to be thought of only as a Portfolio Manager. His role has expanded considerably as investment products become more complex.
Commodity Trading Advisor, Genuine Trading Solutions, a registered CTA with the CFTC, says the role today of a CTA is constantly evolving.
Dwayne Strocen, President of Genuine Trading Solutions says once upon a time a Commodity Trading Advisor was content to be known as a Portfolio Manager trading commodities and futures for a managed futures fund. There is no question today’s investor has become more sophisticated. In response, today’s selection of investment products has become ever more complex and varied, the need for the CTA to understand the uses and management of these products becomes even more acute.
So what exactly is the role of today’s Commodity Trading Advisor. Certainly trading of derivative products for a managed futures fund continues to be as important as before. A CTA has also become more involved with derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.
The use of derivative analytics to manage the adverse risk of an equity or bond portfolio brought about by adverse market conditions is critical in preserving asset growth. The uses of hedging to prevent volatility has long been understood by the largest institutions but is now available to the smaller sized company and to the individual investor. No doubt as products continue to evolve so too will the CTA evolve to meet the need of today’s professional money manager.
Derivative products are no longer limited to exchange traded commodities futures and options. There continues to be an ever expanding list of over-the-counter derivative products. These are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. The difficulty is the buyer and seller must find each other to undertake such an arrangement, not always easy. The second problem is no liquidity. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.
A Commodity Trading Advisor’s role is no longer sufficient to be limited to trading. It is now imperative to understand the industry in a new light so to understand the changing investment environment. Analysis now becomes the catalyst to include a value added service to retain customers. This includes structured productsPsychology Articles, risk management and OTC derivatives. Continuing education has been and continues to be the hallmark of the best in the industry.
The second of a two part article…. Before I discuss the use of hedging to off-set risk, we need to understand the role and the purpose of hedging. The history of modern futures trading begins...
The second of a two part article….
Before I discuss the use of hedging to off-set risk, we need to understand the role and the purpose of hedging. The history of modern futures trading begins in Chicago in the early 1800’s. Chicago is located at the base of the Great Lakes, close to the farmlands and cattle country of the U.S. Midwest making it a natural center for transportation, distribution and trading of agricultural produce. Gluts and shortages of these products caused chaotic fluctuations in price. This led to the development of a market enabling grain merchants, processors, and agriculture companies to trade in contracts to insulate them from the risk of adverse price change and enable them to hedge.
The first commodity exchange was the creation of the Chicago Board of Trade, CBOT in 1848. Since then, modern derivative products have grown to include more than the agricultural industry. Products include Stock Indices, Interest Rates, Currency, Precious Metals, Oil and Gas, Steel and a host of others. The origins of the commodity and futures exchange was created to support hedging. The role of speculators is beneficial as they add trading volume and important volatility to what would otherwise be a small and illiquid market place. You can view a complete listing of the worlds different exchanges at: https://www.genuinecta.com/who-we-are/
A bona-fide hedger is someone with an actual product to buy or sell. The hedger establishes an off-setting position on the futures or commodity exchange, thereby instituting a set price for his product. Someone buying a hedge is known as being “Long” or “Taking Delivery”. Someone selling a hedge is known as being “Short” or “Making Delivery”. These positions known as “Contracts” are legally binding and enforced by the exchange.
Entering your trades either for speculation or hedging is done through your broker. Commodity Trading Advisor, Genuine Trading Solutions President Dwayne Strocen, states that “Commodity and Futures exchanges are distinct from Stock Exchanges, although they operate using the same principals. They are regulated by different agencies such as the Commodity Futures Trading Commission who are responsible for regulation of retail brokers in the USA as well as Commodity Trading Advisors such as us.”
Now let’s view some real life examples of hedging or mitigation of risk by using exchange traded derivatives.
Example 1: A mutual fund manager has a portfolio valued at $10 million closely resembling the S&P 500 index. The Portfolio Manager believes the economy is worsening with deteriorating corporate returns. The next two to three weeks are reports of quarterly corporate earnings. Until the report exposes which companies have poor earnings, he is concerned of the results from a short term general market correction. Without the privilege of foresight, he is unsure of the magnitude the earnings figures will produce. He now has an exposure to Market Risk.
The manager thinks of his options. The greatest risk is to do nothing, if the market falls as expected, he risks giving up all recent gains. If he sells his portfolio early, he also risks being wrong and missing further rally’s. Selling also incurs substantial brokerage fees with additional fees to buy back again later.
Then he realizes a hedge is the best option to mitigate his short term risk. He begins by calling his CTA (Commodity Trading Advisor) and after consultation places an order to sell short the equivalent of $10 million of the S&P 500 index on the Chicago Mercantile Exchange “CME”. Now his result is when the market falls as expected, he will off-set any losses in the portfolio with gains from the Index hedge. Should the earnings report be better than expected, and his portfolio continues upward, he will continue making profits.
Two weeks later the fund manager calls his CTA and closes the hedge by buying back the equivalent number of contracts on the CME. Regardless of the resulting market events, the mutual fund manager was protected during the period of short term volatility. There was no risk to the portfolio.
Example 2: An electronics firm ABC has recently signed an order to deliver $5 million in electronic components of next years model to an overseas retailer located in Europe. These components will be built in 6 months for delivery two months after that. ABC instantly realizes they are exposed to two risks. 1. the rising and volatile price of copper in 6 months may result in losses to the firm. 2. the fluctuation in the currency could easily add to those losses. ABC being a young firm cannot absorb these losses in view of the highly competitive market from others in the field. Losses from this order would result in lay-offs and possibly plant closures.
ABC telephones their CTA and after consultation places an order for two hedges, both for an expiry in 8 months, the date of delivery. Hedge #1 is to buy long $5 million of copper effectively locking in today’s price against further price increases. ABC has now eliminated all price risk. The risk of plant closures is greater than the lure of increased profit should copper price fall. After all, ABC is not in the business of speculating on copper prices.
Hedge #2 is to sell short the equivalent of Euro Currency vs US Dollars. Since ABC is effectively accepting EC in payment, a rising US dollar and a weak EC would be detrimental and erode profits further. The result of the hedge is no risk and no surprises to ABC in either copper or currency levels. A risk free transaction and full transparency is the result. In 8 months with the order completed and the customer accepting delivery, ABC notifies the CTA to close the hedge by selling the copper and buying back the Euro Currency contacts.
Many examples exist to demonstrate the mitigation of risk to an institution or financial portfolio. Dwayne Strocen states that new products are constantly created and available on both over-the counter and exchange traded markets. If would be wise to consult with a qualified Commodity Trading Advisor or broker to discuss the analysis for an on-going risk management solution or a one time only hedge. If you’re not familiar with Genuine Trading SolutionsFree Reprint Articles, you can call them at (416) 302-6282. or https://www.genuineCTA.com
Making comparison between the free insurance quotes of a very large number of various different insurance agencies, companies and providers on the net is really a very easy task. This will also save a huge amount of money and also a lot of time. One can get free insurance quotes from the insurance agent or broker of an insurance company, agency or provider. But in this case he/she has to visit the insurance agent or broker of the insurance company, agency or broker.
So money and time, both will be wasted in this. The comparison making will also be very difficult in this, as manually it is really very difficult to make comparison among a number of things. But comparing them on net is very easy and also no fee is required for that. But one must visit a reputed website in order to get the free insurance quotes of a very large number of various different insurance agencies, companies and providers.
A crucial thing that requires to be kept in mind always is that you must very well know that the insurance company, agency or provider that you are choosing is reputed and also trust worthy. This can be done if you ask your relatives and friends about which company, agency or provider they had chosen for themselves. And are they satisfied or happy with that insurance company, agency or provider that they had chosen.
You can go with an insurance company, agency or provider with which your friend or relative is very happy. As that insurance company, agency or provider will for sure be good for you also. But it may be the case that it will not be good for you. So in order to be at safe side always, do get the free insurance quotes from the websites on the net and make comparison among all of them to select the best insurance company, agency or provider.
This will be better for you and you will be safe every time. Thus before buying an insurance policy, quotes must be observed carefully and comparison must be done between them. This will be beneficial and profitable only for you. Although it takes some time and effort but it is really very helpful. So keeping above things in mind one can get free insurance quotes and can also make comparison among themPsychology Articles, to finally select the best out of them.
Agent can even examine and compare your policy which you already have to what is currently available to you according to your financial status and medical history. One important thing you need to know...
Agent can even examine and compare your policy which you already have to what is currently available to you according to your financial status and medical history. One important thing you need to know before buying health insurance in Florida is that insurance companies penalize their clients for remaining in touch with them for more than two to three years.
Thus, you should go to have one more policy after a couple of years in order to save your health and life.
Start the process for buying required health insurance in Florida
Start the process by asking yourself first what are you looking for? Now make a list of exact quotes according to your financial budget and medical history. The final premium for any life insurance policy, medical insurance policy or even disability is decided by the Underwriter. At this step, you should meet a reputed Independent Agent who can assist you. You also need to know what to expect in terms of your final premium so that you can make a healthy decision of which product to choose. Is there any one company that has the best policy?
In Florida market, there is a tough competition among all insurance companies. All insurance holders live by holding market share, but the others have not succeeded. Let’s see how this proceeds by taking an example of a company, let’s assume there is the NYK health insurance firm in Florida that has got an “A” rating from A.M Best and it is Fortune 500, a national company with great earnings and a long track record. Since there are a number of insurance firms in the state, therefore a leading agent assures that each company has a price benefit in some matters. In this case, the NYK health insurance firm has affordable charge if you do for your family including children. They offer so as they have minimum cost for families and that gives them profit as other insurer charge you per child. On which points your medical insurance coverage depends? You should know the factors upon which your medical insurance coverage depends Financial budget Height and weight issuesMedical history How about child only coverage? Age of each member of your family These are all factors upon which the services of a reputed medical insurance agent based for all Florida people. These are not just the factors, but also some important information for those buying health insurance in Florida. So, if you are not covered in any plan yet, then buy the best plan for yourself. And if you already haveFind Article, then now buy next health insurance product.
Benefits of working with a health insurance agent. It is always nice to have an experienced and knowledgeable professional guide you while choosing your health insurance.
The internet has made shopping for insurance easier. Instead of driving around town to meet with an agent, you can compare rates, benefits, and apply online. Some insurance companies even let you apply right from their website.
Does it still make sense to have an agent help you choose a plan? You bet.
Agents are insurance experts. It’s their job to help you shop plans from leading carriers so you can be confident you’ve found the best rates and benefits for you.
4 Reasons To Work With An Insurance Agent When you consider all the benefits, working with an agent just makes good sense.
Agents guide you through the process. Buying an insurance policy can be complicated. An agent walks you through each step of the process and helps you make sense of all the “insurance-speak”.
Agents offer you choice. Your agent has a portfolio of plans to choose from, often from multiple companies. Your agent will know which policy will protect you the best. They'll even know which company is most likely to accept your application.
Agents troubleshoot mistakes. A mistake on your application can cause a company to raise your rates or even reject your application. Your agent will help you fill out your application correctly so you get the rates you deserve.
It’s free. This is the best part about getting insurance through an agent. Agents collect payment from the companies they represent. So you get all the advice you want — absolutely free.
So, what are you waiting for? It’s really worthwhile to have an insurance package to protect youFree Articles, rather than having to rush about to get funds during times of needs. Look up and call an insurance agent today to get a free health insurance quote.
The right insurance agent or insurance brokers, in fact plays the role of a trusted financial advisor whose timely intervention proves crucial when it comes to ensuring financial safety and security!
Choosing a right Insurance Agent who can provide commendable guidance in Insurance related matters is as important as choosing or selecting a good physician, advocate or financial advisor for your family.
So what is it that makes Insurance Agents so important in your life? The answer is rather simple! An insurance agent, also sometimes referred to as Insurance Brokers, you finally choose can probably be a deal maker or a deal breaker of your life and its savings. For the fact that Insurance is something that involves yours and your dependants' lives and assets, it has to be a decision that demands enough of your time and involvement.
Who are Insurance Agents or Brokers?
If you are not aware, there are two kinds of Insurance agents or brokers you may come across; a type of agents are professionals who work for a particular Insurance Company promoting their products and hence offers restricted choice for a prospective buyer. Whereas, the second kind of agents, often called as brokers are independent professionals who work solely for a particular insurer or group of insurers, by willingly assisting the buyer with broader and detailed outlook of a choice of insurance policies or products from various Insurance companies and then charges a nominal fee or commission for the service done. One advantage of going for an independent Insurance broker is that you are not restricted or forced to buy policies of a particular insurance company alone.
Why is it Vital to Choose the Right Agent or Broker?
Be it business or insurance, in life everyone looks for some cost-effective deal and it is only a good insurance agent who can get you competitive quotes by comparing different plans offering the same coverage. Only a good insurance agent who has ample exposure and knowledge in the insurance type of your choice can ensure that you are covered under a policy that gives you maximum protection at a premium rate that is comparatively low. However, a true and genuine person alone can convince you with the fact that the coverage level of an insurance policy that protects your life against a truly enormous sum doesn't come very cheap either.
How to Look Out for a Good Agent?
Always remember it is not the total number of policies sold by an agent that makes him/her great, butBusiness Management Articles, what matters is how well they have played their role in covering the insurance buyer under the best possible insurance plan within the set budget.
One of the most important things to look for when trying to find insurance agents in San Diego is reputation.Before you commit to any one insurance agent or insurance policy.
Having a qualified and quality insurance agent, who knows what they’re talking about, can be extremely helpful and important to securing the kind of insurance that you need. It doesn’t matter if you own a car, a home, or a business; you will most likely want to be insured. The things you own, and especially your life, are well worth the menial costs of being covered. Simple and more severe accidents happen all the time and you can find yourself in a devastating situation in a mere instant if you are not adequately prepared for these unwanted circumstances. Having insurance has become a necessity in the world today.
But how do you know what type of insurance you really need? It seems that there are so many different types of insurance coverage out there, and it might be difficult to know where to start. And how do you know how much coverage you need, once you have narrowed in on the most appropriate type of insurance policy? These are questions that are often easily answered by quality insurance agents in San Diego. When you take into account all that is at stake, it can be extremely important to make sure you have an insurance agent who really knows what they’re talking about. You will want to find the insurance agent that is going to help you the most.
So how do you know what to look for in insurance agents in San Diego? How do you know if your insurance agent is the right one? Finding the best insurance agent for your needs can sometimes seem like an intimidating task. There are often many different insurance services available, and you might need a little help to get started in the right direction.
One of the most important things to look for when trying to find insurance agents in San Diego is reputation. You will want to find a company, and specifically an insurance agent, that has a solid reputation for helping individuals secure insurance. Years of experience can also be an important thing to look for. Having a lot of experience, and a reputation for success, can be a great sign that you have found a quality insurance agent.
Before you commit to any one insurance agent or insurance policyFeature Articles, you will likely want to consider a few options first. It is often a good idea to shop around to see what is available and to get some ideas on what you are looking for.
