Futures & Options For Dummies

387 Pages·2006·3.41 MB·English

by  Joe Duarte MD

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Futures &
Options
FOR
DUMmIES
‰
by Joe Duarte,MD
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01_752835 ffirs.qxp 3/6/06 2:29 PM Page i
Futures &
Options
FOR
DUMmIES
‰
by Joe Duarte,MD
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Futures & Options For Dummies®
Published by
Wiley Publishing, Inc.
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www.wiley.com
Copyright © 2006 by Wiley Publishing, Inc., Indianapolis, Indiana
Published by Wiley Publishing, Inc., Indianapolis, Indiana
Published simultaneously in Canada
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About the Author
Dr. Joe Duarteis a widely read market analyst, writer, and an active trader.
His daily Market IQ column is read by thousands of investors, futures and
stock traders, information seekers, intelligence aficionados, and professionals
around the world.
Dr. Duarte is well recognized as a geopolitical and financial market analyst
combining a unique set of viewpoints into an original blend of solutions for
his audience. His daily columns appear at www.joe-duarte.comand are
syndicated worldwide by FinancialWire.
He is author of Successful Energy Sector Investing, Successful Biotech Investing,
and coauthor of After-Hours Trading Made Easy.
He is a board certified anesthesiologist, a registered investment advisor, and
President of River Willow Capital Management.
Dr. Duarte has appeared on CNBC and appears weekly on The Financial Sense
Newshour with Jim Puplavaradio show, where he comments on the energy
markets and geopolitics. He has logged appearances on Biz Radio, Wall Street
Radio, JagFn, WebFN, KNX radio in Los Angeles, and WOWO radio.
One of CNBC’s original Market Mavens, Dr. Duarte has been writing about the
financial markets since 1990. An expert in health care and biotechnology
stocks, the energy sector, as well as financial market sentiment, his daily syn-
dicated stock columns have appeared on leading financial Web sites, includ-
ing Reuter’s e-charts, afterhourtrades.comand MarketMavens.com.
His articles and commentary are regularly featured on Marketwatch.com.
He has appeared in Barron’s, U.S.A. Today, Smart Money, Medical Economics,
Rigzone.com, and in Technical Analysis of Stocks and Commoditiesmagazine.
Dr. Duarte published the critically acclaimed market timing newsletter “The
Wall Street Detective,” from 1990-1998, when it became an exclusively elec-
tronic publication. His daily market commentary ‘Joe Knows’ appeared on
Financialweb.comfrom 1998-2000. Dr. Duarte served as senior columnist
for Investorlinks.comfrom 1998-2001.
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Dedication
This one goes to the usual suspects. Without you, life wouldn’t be as interest-
ing. You know who you are. No matter what, you continue to do that voodoo
that you do . . . so well. . . .
Author’s Acknowledgments
A book is as much about environment, accidents, incidents, and circum-
stances as it is about research. This group of people fits the bill for creating
all of the above, and I’d like to offer my sincere gratitude, because it is the
sum of their interactions with me that often leads to interesting ideas and
observations that make their way onto the written page.
I’d like to thank the subscribers and sources of Joe-Duarte.comfor their
continued interest and support.
My wife, Lourdes, my son, Metheny, my mother and father, Raquel and Jose,
and Angela, the book maven, are always there, no matter how grumpy I get
near manuscript deadlines. Thanks to them.
Sal, Lib, and the office gangs, this one was harder on all of us than I would
have expected. Thanks as usual.
Frank Kollar is as good a partner as anyone could have. Thanks, and enjoy
that kafi.
Greg Morris, thank you for lunch, and all kinds of intangibles.
John Duke, for all the e-mails . . . and stuff.
Marty, thanks for the annual pilgrimage to Starplex, where the soul gets
renewed.
And especially Grace, without whom there would be no book gigs. Keep them
coming.
And thank you for your ongoing support to:
Jim, Mary, John, and Liz at Financial Sense News Hour.
Tom Bemis at MarketWatch.com.
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Gail Essary at Financial Wire.
Charly Butcher and the gang at WOWO.
Jill Woerner at CNBC.
A very special thanks to the new gang at Wiley — Stacy, Tim, Neil, and com-
pany. It’s good to be back in the saddle.
Very special thanks to Thom Calandra, whose early support allowed my writ-
ings to go farther and wider than I could have ever imagined. Stay well, and
no worries.
Coffee and tea . . . fuel for life . . . and writing books.
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Publisher’s Acknowledgments
We’re proud of this book; please send us your comments through our Dummies online registration
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Contents at a Glance
Introduction.................................................................1
Part I: Understanding the Financial Markets..................7
Chapter 1: The Ins and Outs of Trading Futures and Options......................................9
Chapter 2: Where Money Comes From..........................................................................17
Chapter 3: The Futures Markets.....................................................................................31
Chapter 4: Understanding the Not-So-Hair-Raising Truth about Options.................45
Chapter 5: Yeah Baby! Basic Stock Option Strategies..................................................71
Part II: Analyzing the Markets ....................................89
Chapter 6: Understanding the Fundamentals of the Economy..................................91
Chapter 7: Getting Technical Without Getting Tense................................................111
Chapter 8: Speculating Strategies That Use Advanced Technical Analysis............135
Chapter 9: Trading with Feeling Now!..........................................................................153
Part III: Financial Futures.........................................173
Chapter 10: Wagging the Dog: Interest-Rate Futures.................................................175
Chapter 11: Rocking and Rolling: Speculating with Currencies...............................195
Chapter 12: Stocking Up on Indexes............................................................................213
Part IV: Commodity Futures.......................................227
Chapter 13: Getting Slick and Slimy: Understanding Energy Futures......................229
Chapter 14: Getting Metallic without Getting Heavy.................................................253
Chapter 15: Getting to the Meat of the Markets: Livestock and More.....................271
Chapter 16: The Bumpy Truth about Agricultural Markets......................................285
Part V: The Trading Plan...........................................299
Chapter 17: Trading with a Plan Today So You Can Do It Again Tomorrow...........301
Chapter 18: Looking for Balance Between the Sheets...............................................309
Chapter 19: Developing Strategies Now to Avoid Pain Later....................................317
Chapter 20: Executing Successful Trades...................................................................327
Part VI: The Part of Tens...........................................341
Chapter 21: Ten Killer Rules to Keep You Sane and Solvent.....................................343
Chapter 22: More Than Ten Additional Resources....................................................349
Index.......................................................................353