Web-based, Electronic Retail Trading of ATM Binary Options
An easy-to-use, web-based electronic trading platform plus several market innovations designed to simplify the trading decision are generating excitement and activity into retail binary options trading. This White Paper will describe binary options in theory and in practice, study the binary options purchase decision and conclude with an illustrative example.

The Binary Options Trade System: Theoretical Insights
Binary options are a novel type of investment and it follows that a successful trade system will have characteristics different from those of more traditional investment assets. Studying the mathematics behind trading binary options can help move the trader along the learning curve by revealing useful insights into the design and evaluation of a binary options trade system.

The Binary Option Hedge: Is this a Viable Trade Strategy?
A binary option hedge is constructed by combining a long position in an asset with a put binary option on that asset, or a short position with a call binary option. While a standard option hedge is a viable trade strategy, a binary option hedge is much less so. Indeed, the unique characteristics that make a binary option attractive from an investment viewpoint also limit the efficaciousness of a binary option as a hedging instrument.

Forecasting U.S. Nonfarm Payrolls: Preliminary vs Revised Values
The CME Group in early 2008 listed for trading futures and options contracts on the monthly Nonfarm Payroll (NFP) release and this in turn has sparked interest in forecasting this important economic statistic. Graphs are drawn and regressions are run that match historical monthly changes in NFP with other variables in the hope of finding a stable relationship. The main problem with this approach - and one that many traders may not be aware of - is that the historical data have been revised several times. The futures contract, in contrast, is based on the preliminary estimate for the most recent month and this estimate can differ markedly from the final, revised figure. Consequently, forecasting the NFP futures price needs to take into account the discrepancy associated with the preliminary figure.

Managing Order Types in Electronically Traded Commodity Markets
Electronic trading whereby orders are transmitted online, matched on an exchange-regulated central clearing facility, and then reported is here to stay. This, in turn, requires that the futures trader have working knowledge of the mechanics of electronic trading perhaps the most important of which are types of orders and when to use them.

The Effect of Selection Bias in the S&P 500 Index During the Recession of 2008-2009
The composition of the S&P 500® Index is dynamic in the sense that any component company will have its index weight adjusted should its market capitalization significantly change and, in the extreme, may even be removed from the Index and replaced by another. During the period of severe economic stress in 2008-09, such rebalancing and substitution resulted in a large number of household-name firms being reduced in representation or removed altogether from the Index. The effect of this selection bias creates a more robust and more bullish Index and this, in turn, provides insight for the S&P 500 Index trader.

Archived Videos

Is the CPI Really Measuring Inflation?
Despite evidence of inflationary pressure in producer prices and import prices, and despite continued records being set in the prices of crude oil and gasoline at the pump, the Consumer Price Index (CPI) has been painting a rather sanguine picture of inflation. In fact, according to CPI data over the first four months of the year, inflation is moderating significantly. This is prompting many consumers and traders to doubt the efficacy of the CPI in measuring current inflation. Join Rick Thachuk, commodity trader and former central bank economist, as he puts the CPI under the microscope to learn: What is the CPI saying about inflation and do you believe it. Why the CPI ex food and energy is an invalid measure in the current climate. An argument for why the CPI may be missing the mark. How to properly position yourself as an investor or trader. This 35-minute video is complete with graphs, numbers, a little bit of mathematics and even a few trips "to the blackboard" to reinforce the material being presented. Links to additional resources are also provided. It will not only help to prepare you as an investor or trader, but it will also give you a firm understanding of the CPI so that you can form your own opinion. Produced May 2008.

Explaining the Credit Crisis in Plain Language.
The credit crisis that began in the summer of 2007 as a seemingly localized event, expanded over the subsequent year to impact the lives of many individuals, not just in the United States where it began, but internationally as well. Yet understanding the credit crisis is no simple task. Tracing cause and effect is difficult in large part due to the complexity of the financial market system that moves capital from those who have it to those who need it. In this 42-minute video, join Rick Thachuk, former central bank economist, as he navigates you through the credit crisis in simple, easy-to-understand terms complete with helpful illustrations. Links to additional resources are also provided. Produced Oct 2008.

China and Gold: Explaining the Chinese Yuan Situation in Plain Language.
This 39-minute video provides a background to understand the Chinese yuan situation, explores the implications of a yuan revaluation along with other specific factors to the gold market, and then considers various gold trading strategies with respect to ETFs, physical metal, futures and options. The video concludes by describing a gold options-related strategy designed to generate income while limiting risk to a known and fixed amount. The presentation is heavily illustrated by supporting diagrams, statistics and charts and narrated in plain language so as to be accessible to all. Links to additional resources are also provided. Produced Sep 2010.

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