|The Option Model for the New Millennium.|
|OPTION SERVICES for COMMODITIES, CORPORATION:|
Accuracy of OSCC Futures Programs
Futures are driven by the consensus opinion of all traders. If all the traders think that the futures are going to go up, the futures just fly. However, if only 60% of the traders think they are going up, the futures move more slowly. They have less inertia to rise. This is called momentum. Our OSCC Future's Momentum is a measure of that inertia. The futures are like a rubber ball thrown at a wall . When it reaches the wall it begins to slow down giving up its momentum. As it springs back from the wall it regains its momentum, but in a different direction. Futures are the same. When traders see that they have reached as far they think they should go the futures lose their steam in going in the direction they had been moving. and pick up momentum in the other direction.
Our "Today's Calculated Future"
This is our estimate of what the future would be if it expired today.
The OSCC FLOOR VALUE depends on knowing the present value of the underlying future. This works fine for the near term option contracts, as there usually is enough volume to keep the options updated. In the past if an option contract was more than 3 months beyond the present near term contract there was sufficient volume in that future that the options were updated constantly. This no longer appears true. This can easily lead to some poorly priced estimates of options prices for contracts 3-9 months in the future.
What we have done therefore is attempt to estimate the value of the future for these far out option contracts, Another set of algorithms was created to accomplish this. The result was that the percentage of trades "Direct Hits" in the "OSCC Diff = 0 and +/- 1" range jumped by 20-30% in these far out contracts. This was sufficient for us at this time to use this estimate without trying to enhance its accuracy. No attempt has been made to track or test this accuracy either, although the parameters are used for comments on the futures. A short remark will occasionally be made on the futures on the comment page. A chart was created to depict the range of future values we use to determine the value of the options in the back months when that contract does not have a future more current than the front month. The left side of the chart is the value of the futures should they expire today and the right side shows how much change in the value of the futures is predicted if it expires one year from today. See Futures charts.
We also have a new
"chart explanation page" to help explain
what these charts show and how to use them.
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Last Updated on
By Tom B
As used throughout this web site: 10/31/2019
This site relates to option trading of commodity options and futures with strategies that buy or sell
puts and calls either long or short for profit on treasury bonds and notes, Dow Jones Index, soybean products, corn, wheat, oats, rough rice and T-Bond
options on the CBT, Chicago Board of Trade through "floor
traders". We are also doing 6 currencies from the CME, the Chicago
Mercantile Exchange, the Japanese Yen, British
Pound, Swiss Franc, the Euro FX (ECU) and the Australian and Canadian dollars.
We also do 5 agriculture products, the S&P 500, NASDAQ 100 and Eurodollars
related to European and Economic Monetary Union (EMU) interest rates. Commodities are a high risk speculative hedging investment
and traders should use brokers for trading contracts who keep
their funds and money in accounts with high rates. This site provides free commentary, and technical analysis on commodity futures
and option premiums by OSCC from our futures charts and option charts for
use by traders.
This site no longer provides free quotes, although we do provide a free commodity ticker.
Copyright 1999-2007 by OPTION SERVICES for COMMODITIES, CORPORATION