Volatility:every time the market looks like it will turn down, then people got scared and buy puts; check all secotrs, incl austrilia dollar as a raw material demand indicator, oil pattern, copper, eem The Return of Market Volatility By Alan Knuckman 01/26/10 Chicago, Illinois – I believe we’re still at a reasonable level of volatility. If anything, last week’s correction was long due. The 5% S&P sell-off was the worst since March 2009. Put in perspective, though, 15-month S&P highs were made Monday, Jan. 19 – a mere five trading days ago. Last week has definitely gotten our attention, but remember, we have seen this action repeatedly before. For the last 10 months, every time the market looks like it will turn down, it has responded with a rally to new relative highs. Take a look: One component in pricing for the options that we trade here at Resource Trader Alert is volatility. For our purposes, it helps us determine simply to buy an outright option if prices are cheap or to purchase a spread if they’re expensive. An increase in volatility is an increase in price movement – and don’t forget we need the markets to move in order to make money on our positions. It may be cliché, but my nearly 20 years of experience makes me most afraid when others are not and gives me a sense of calm when the public is frantic and unhinged… Risk is always quantified and controlled with our strategies and that does not change as volatility increases, but opportunities do. Alan Knuckman Commodity expert Alan Knuckman hails from the home of commodity trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Alan’s worked with all aspects of the commodity markets for the past 18 years - and now he brings his inside knowledge on energies, grains and gold to you. Alan's expertise and authority has led to frequent appearances in mainstream media, such as MarketWatch, Bloomberg, Fox Business, CNN Money, and Reuters. He has also made multiple appearances on CNBC and CNBC Europe programs. Alan is currently the editor of Resource Trader Alert, a trading service devoted to raking in profits from hard commodities. Special Report: From Hulbert’s No 1-Ranked Advisory Letter Over 5 Years, GOLD $2000: Five entirely new ways to play the gold trend and a hidden way to snap up gold- for less than one penny per ounce! View articles by Alan Knuckman
