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Anticipating Change and Identifying Opportunities in the Energy Markets

The obvious answer is great timing, of course. 

Decades before the NYMEX went fully electronic, Jerry Rafferty became one of the first professional floor traders and brokers to apply technical analysis to anticipate change and identify opportunities in the futures markets. As a matter of fact, he introduced the concept of technical analysis to the energy industry as a disciplined approach to hedging and trading strategies. Today, Rafferty Commodities Group is a full-service independent Introducing Broker that uses our proprietary technical analysis as a disciplined approach to hedging and trading strategies. Our clients call it a proven, market-timing tool. We think you’ll agree. Now, we invite you to see for yourself with our 30-day, no-obligation trial of Wake Up to ENRG™.  Once you sign up for access to our technical analysis, you will also receive our timely Call to Action emails that alert you to real-time shifts across all energy markets. We’re so confident you’ll recognize the extraordinary value Rafferty Commodities Group offers, you’ll want to join the nation’s leading industries and professional managers by becoming a client right away. Ready to get started with Wake Up to ENRG?  Visit us at www.ENRG.com.

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It's Not Always What You know About the Energy Markets, It's When

Every day, Rafferty Commodities Group hears from commodity hedgers, traders and risk managers looking for the best way to manage their exposures and maximize their returns. Price is the distillation of all the data and information. To the trained eye, we recognize that patterns and trends reveal themselves and give us the ability to better time entry and exit points in the market. The decision of WHEN to buy and sell should rank as the most important part of a hedging/trading strategy. At Rafferty, we share that “when” with clients every market day with our proprietary technical analysis, charts and interpretation. Now, we’d like to share those “whens” with you for a full 30 days. No cost. No obligation. No hassle. Simply sign up to Wake Up to ENRG at www.ENRG.com. You’ll also receive our Call to Action emails that alert you to immediate shifts across all the major energy markets. We’re so confident you’ll recognize the extraordinary value Rafferty Commodities Group offers, you’ll want to become a brokerage client right away. Visit us at www.ENRG.com to learn more about our services—and why the nation’s leading industries and professional managers put our expertise to work every day.

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Introduction to Options

Since 1987, the New York Mercantile Exchange has introduced options contracts on all of the Energy Futures. The flexibility of these contracts has ensured their continued success in years to come.

Options Benefits

The value of the options market to both hedgers and speculators can not be understated. For example:

  • Options provide hedgers with the ability to hedge cash and futures positions against adverse price fluctuations, while still allowing for profit on favorable price swings.
  • Options offer the availability of hedging insurance at many different levels of cost and degrees of protection.
  • Options provide a host of complex strategies that can be used alone, or in combination with futures contracts. They can be tailored to fit any risk profile, time horizon, or cost consideration.
  • In contrast to futures, there are no margin calls for option buyers. If the market moves against a position, and a trader holds on to his option, the maximum loss is the amount he paid for the option. Conversely, if the market moves in a traders favor, the unlimited profit potential of an option can ultimately parallel that of a futures position.
  • With the exception of the spot month, futures contracts are subject to limits on daily price movements. However, there are no restrictions on how much fluctuation there can be on an options contract. Therefore, options may be traded during times of extreme volatility when futures contracts are locked limit and unable to trade.

Options Defined

Simply stated, a participant who buys an option is given the right, but not the obligation, to require the seller (writer) to perform according to the provisions stated in the contract. Options are segregated by calls and puts, contract month, and strike price.

Calls and Puts

There are two types of options: calls and puts. Both are traded in the first six months of the underlying futures contract.

  • A call option is a contract that gives the buyer the right but not the obligation to buy a fixed number of futures contracts at a fixed price at any time on or before a fixed date.
  • A put option is a contract that gives the buyer the right but not the obligation to sell a fixed number of futures contracts at a fixed price at any time on or before a fixed date.
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