This complimentary article from Options Profits was originally published on January 3 at 3:13pm EST. Don't risk missing over 40 options trade ideas every week and exclusive commentary from over 10 experts. Click here for more information.
Hello all and welcome to the weekly resource brief where we break down opportunities in the dynamic commodities markets. The mandatory use of options allows us to control risk and take advantage of longer term trends in the true Supply and Demand markets.
These futures options have many advantages and offer a more pure play with leverage on leverage benefits not available with typical equity options plays.
In addition to identifying profitable option plays the intention is to educate, inform and even entertain with our discussion about the vital economic building blocks, Commodities, that are the underlying basis for all investments.
Briefing for January 3 - Euro Demise Surprise and Gold Wave Hello
Psychology plays an important role in the markets as it drives the decision making process for many investors. The discipline of proper money management and probability are often overlooked when A LARGE number of market participants have the same opinion where they think things a headed in the future...
The masses may be right, but more often than not they, as a group, get it wrong.
European History ?? Lesson
The Euro Currency, (not to be confused with EuroDollar that is the high volume short term interest rate product), was created in 1997 and launched in 1999. The economic union to compete with the U.S. economy had challenges from the start with different cultures and economic fundamentals. Individual countries had sharply different rates of employment, inflation, debt and almost as importantly work ethic and worldview.
The Euro Currency is sometimes seen as only as strong as its weakest link. The combined might of the Euro Zone compares with the US in population and global GDP. Fundamentally the on again/off again Greek crisis has pressured the financial markets in both 2009 and 2010. Concern that contagion would bring the Euro Currency down and take everybody else with it was front of mind and a psychological weight that the markets are only starting to get past.
Prices hovering around 130 are solidly above the 1999 launch at 125. That fact is often neglected when the often mentioned Death of the Euro is greatly exaggerated, to borrow the phrase.
Only a few short years ago there was talk was about the Euro replacing the Dollar as the world's reserve currency. The all time highs made in 2008 at 160 is not that far off from current levels. An 18% drop in the three year period does not demonstrate the catastrophe or crisis that the pundit class fan the flames daily.
Anything CAN happen... that doesn't mean there is a high probability that it WILL.