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Crude Oil’s Next Move? Clues from Soybean Oil

As we observed in our past research , soybean oil prices often lead the movement in crude oil prices.  The past year has been no exception.  Even as WTI crude prices soared from $42 to $66 per barrel between June 22, 2017, and January 25, 2018, soybean oil traders weren’t …

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Italy, Germany Sunday Event Risk: Market Impact

Euro-U.S. dollar (EURUSD) options traders are nervous ahead of the national elections in Italy on Sunday March 4th, and the German Social Democratic Party’s (SPD) internal vote on whether to enter into another grand coalition with Chancellor Angela Merkel.  The outcome of these two events in Europe risks reverberating through …

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What are Ag Options Traders ‘Smiling’ About?

Our recent article on options on agricultural products marveled at the relatively low prices of at-the-money (ATM) options, especially in the face of a gathering La Niña, albeit a relatively mild one so far. As interesting as ATM options are, out-of-the-money (OTM) puts and calls are also telling their own …

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Anatomy of an Equities Correction

Equities have bounced back from correction territory but how will the pace of Fed rate hikes, rising budget deficits and inflation impact stocks and bonds.

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La Niña: Calm Before the Storm in Ag Markets?

Corn, soybean and wheat markets are witnessing an odd juxtaposition – the onset of a La Niña and exceptionally low options’ implied volatility (Figures 1 & 2).  Why this is unusual is that corn, soybeans and wheat often experienced exceptionally high volatility (about 1.3-1.5x normal) during many of the past …