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This session will cover and review the basic concepts in futures trading for not only rice but also grains, the energy markets, and any futures market where risk can be reduced by using the market. Notice we said using not trading. There is a big difference in those two terms which we will discuss.
If you have been in this session before, it will act not only as a refresher course but also provide you with an idea of your current understanding of the hedging process and how everyone from small traders to large commercials use the market for risk protection. We will start at ground level and build on the concepts of how farmers, millers and grain merchants protect themselves from price risk in many different time periods. We will even talk about how speculators and specifically large fund managers trade in the futures market to provide returns for their investors.
We will also look at options and how they can be used to determine the size of the risk based on current trading in the market itself. Understanding some of the components of options is critical to understanding the level of risk in the market at any point in time. We will also cover some of the strategies used by professional traders that provide protection yet leave room for additional profits.
This is a working session with a workbook for you to answer and solve the problems with the ideas and concepts we cover. So, bring your pen and a calculator (it's simple math, no algebra involved) and we will have some fun as we look at How Buyers and Sellers Use the Futures Market.
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