by Houghton and Atkeson 07/01/08
Q: How do fluctuations in the U.S. dollar's value impact commodity prices?
A: Crude oil futures, although traded globally, are priced in U.S. dollars per barrel. As the value of the dollar falls versus other currencies, the price per barrel of oil rises regardless of any other demand/supply forces at work.
Additionally, crude and other physical commodities such as gold are often used as a hedge against inflation, as they hold their value as prices increase. The combination of increased inflation expectations and a lower exchange rate for the dollar has recently prompted investors to sell dollars and buy commodities.
Bryan Perry
Use Option Collars to Button Up Gains
If one of your stock has made some significant gains, a collar is an option strategy that can help you preserve your profits and protect you in case the shares take a tumble.
Exchange-traded funds (ETFs) are turning into the 'next big thing' in many investment circles.
Take Options Profits in STRIDES
Learn about a type of hybrid security that is structured like a bond and matures in a fairly short time frame, and even pays dividends.
Build Your Own ETF with Options
If you're finding it tough to grind out profits in the current trading environment, consider this strategy: Create your own ETF with options from stocks in hot sectors.
You don't have to buy the same number of contracts with every options trade you make, especially when trading the options of higher-dollar stocks.
