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A Market Review And Opinion Report For July 17, 2011
jmound
post Jul 18 2011, 07:14 PM
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Webster’s Dictionary defines the adjective volatile as tending or threatening to break out into open violence; explosive. I cannot think of a more appropriate term for what is underway in the commodity, FOREX and stock markets.

Without volatility there is no opportunity. If price does not change and is not expected to change then there is no reason to speculate and no reason to buy or sell options. Varying degrees of volatility exists in all futures markets, and the greatest opportunity exists when the current or anticipated volatility is drastically different than the reality of the future volatility. This can work in either direction, and if volatility is expected to decline then the opportunity would be to sell option premium. The logic is that if volatility is high and expected to decline then current option premiums are overpriced and the lack of future volatility will allow for a higher probability of successful premium collection. However, this opportunity presents defined profit with unlimited risk exposure. While this strategy and market environment can potentially be a profitable one, it is a ticking time bomb waiting to explode when that volatility changes, and few traders, if any, are truly capable of always identifying that shift ahead of time.

The real opportunity exists when that volatility scenario is reversed. When current and anticipated volatility is far below what will actually occur, a trader can then take advantage of the imminent premium expansion in options. This is where a forecast for volatility expansion can be more important than forecasting a trend or channel. Long options and certain option spreads are critical instruments in this environment.

In 2008, when volatility expansion took the ill-prepared stock and commodity investor by storm, the typical investor found themselves in a form of quicksand. So with tons of new volatile market variables and little recent history to guide the average investor on what to do, many investors found themselves stuck in plummeting stock and commodity positions. Stuck and sinking – quintessential quicksand characteristics – this is not a good experience for most investors as they watched their holdings plunge 30, 40, 50, 60, 70% or more in some cases. The worst part is that while investors found themselves stuck and panicking this was actually the time to take action and to speculate. Remember, where there is volatility there is opportunity, and an educated investor has to have a sense of timing.

Well, I believe that timing is right now.

The 2nd half of 2011 should provide some of the most extreme price moves I have ever seen in several key commodity sectors, stocks and FOREX. There is a perfect storm brewing, akin to the 2008 credit crisis, but on a totally different, and potentially more extreme, level.

The reality is only a percentage of you will see the logic in buying my Mega Volatility Eruption Forecast, even fewer will heed the warning within it, and only a small percentage will execute the trades I recommend. It is unfortunate but some will simply not agree with the importance to act or see the opportunity I present. I believe it is one of my most significant reports to date – more significant than the U.S. dollar career bet in 2008, the Japanese Yen career bet that followed, the Coffee breakout forecast in 2010, and even the bear forecasts made in cotton, cocoa and coffee last quarter. While I have to contain the number of traders that will utilize this critical market forecast, I want to make it accessible to just about everyone, so to that end I am offering 70% off my forecast thru Tuesday at 5pm ET. It is just $69 – plus buyers get two incredible bonuses with a value exceeding $100.

James Mound
James Mound Trading Group LLC
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