The Financial Markets such as the Dow and Nasdaq lost 128 points, giving the blue chips an eight-day loss of just under 2,400, or 22.1 percent. The only good news is that fact the the SEC allowed short selling to re-enter the market for much needed liquidity.

Several stock and commodity broker don't understand why the SEC just didn't halt trading for the companies that they were affraid would be wrecked. Keeping the billions of dollars of manged money has been the main reason for this panic exiting by mainstreet out of the market.

Going forward into next week investors can expect a much less volatile retreat in the market, and even rallies.

When the short sellers exit the market they have to buy causing short term spikes and rallies similar to what was seen before this major crash.

Commodity Prices have been retreating as speculators sold and shorted the market due to less demand world wide.

Oil has retreated with gold on the rise. gold historically goes higher this time of year though with the up coming indian wedding season as well as the restructuring of fund managers portfoilios before years end.

Short Selling Returns!

The return of Shot Selling is a Necessary Action In Trading in all Market Sectors

The ban of short selling limits market liquidity! If you don't allow shot selling, your not allowing the billions of dollars a day from the manged and hedge fund sector that makes up a huge percentage of volume. Short selling is not a long term position hold, and when exiting the market will cause much need spikes and rallies much needed in this free fall. If you leave the direction of the market to individual buyers, your letting everyone down!

With Equities, the share price declines coincided with the lifting of a ban on traders who aim to profit from share price declines. The ban had prevented short selling on nearly 1,000 companies, including financial firms and industrial groups such as GM. The ban was lifted by the US Securities and Exchange Commission late on Wednesday night.

While the ban may have created an initial short squeeze that buttressed financial stocks, traders say hedge funds were then forced to bring down their corresponding long positions in other financial stocks, which created new selling pressure.Weather your a stock or commodity broker today is a good day!

Many market participants believe regulators will be forced to quickly bring back measures similar to the so-called “uptick” rule. The rule, which was scrapped last year, allowed short selling only when the last tick in a stock’s price was positive.

Commodity News

Weekly Option Volatility Report

Each week OPTIONMIZER analyzes markets showing opportunities based on volatility. We delve into the volatility analysis of the markets to find trade designs advantageous to options traders. This report provides specific trading strategies to use in select markets based on the OPTIONMIZER volatility analysis.


October 7th, 2008

S&P 500

5 Month Average Implied Volatility = 24.9
Current Estimated Implied Volatility = 37.1


MARKET AND VOLATILITY ANALYSIS:
Since the approval of the $700 Billion financial rescue plan by a vote of 263-171, the market has done anything but react favorable. The stock market headed lower to start the week as the potential global slowdown sends investors packing. Bailout aside, at home the evidence of deepening credit concerns and employment meltdown is mounting. With the banking situation the way it is and concerns growing among investors that there could be more to fail, the Fed could look to reduce interest rates shortly. Credit issues are a worldwide problem at this point and until it has been addressed the market does not look to have much potential. As previous reports have indicated the volatility in the S&P has been high but continued to increase. This still seems to be the case. Continue to buy premium to take advantage of the even still increasing volatility that is expected to come.

RECOMMENDATION:
Buy short term puts. If these are too expensive implement bear put spreads put on by a qualified commodity broker to help offset the cost. If the market continues to sell off be prepared to scale out of positions.

SOYBEANS

5 Month Average Implied Volatility = 42.5
Current Estimated Implied Volatility = 47.6


MARKET AND VOLATILITY ANALYSIS:
Beans are continuing to be harvested in the south as well as Australia. Right now the quality of the soybeans continues to remain an issue. Like most of the commodities soybeans have experienced recent sell off. It appears at this point there is profit taking helping the market continue its move down. The fundamental issues regarding this market seem to be in the shadows at this point. However, China is king right now and they could influence the market based on what direction they go. The volatility in soybeans is high. With the implied volatility above the statistical, premium collection is the proper play. The implied volatility is up 12% from the 5 month average.

RECOMMENDATION:
Sell butterfly call spreads as well as call spreads.

SUGAR

5 Month Average Implied Volatility = 38.8
Current Estimated Implied Volatility = 44.3


MARKET AND VOLATILITY ANALYSIS:
Sugar has had a substantial sell off over the past week. However, that was stalled today thanks to India deciding to halt exportation due to the low pricing. This caused Asia and Africa to find replacement shipments. The fundamentals in this market seem to be fine, the problem is the strength in the US dollar. The volatility is high right now and it appears that may continue. The sugar market has potential to the downside. The implied volatility is lower than the statistical. In this environment buying premium is recommended. This is due to the expectation of volatility continuing to increase.

RECOMMENDATION:
Buy intermediate term puts (March) or if they are too expensive look to purchase bear put spreads for the same time frame.

HEATING OIL

5 Month Average Implied Volatility = 45.9
Current Estimated Implied Volatility = 53.1


MARKET AND VOLATILITY ANALYSIS:
Heading into the cold months heating oil is a typically a seasonal buy. Heating oil recently saw its first increase in 5 days. With the expectation that heating costs should increase as much as 25% this year the unknown is the weather. A cold winter could cause increased volatility to the upside. It is clearly shown by the chart below that both the statistical and implied volatility is very high. This jump came after the statistical crossed through the implied in the beginning of September. With the volatility so high and the expectation of prices increasing, look to sell high priced premium options that lose value on bullish moves.

RECOMMENDATION:
Collect premium by selling put spreads.