With a greater understanding of the hedge ratio, last year's market turmoil would not have been a surprise, says Richard Jones.
As the chart below shows, from late July the Dow was showing
that there was virtually no support at all, and what resistance
there was resided at 12700. Sobering.
This study of futures and options might not predict what
will happen, but it most certainly predicts what could
Before discussing the Chart perhaps an appreciation of the
environment would be useful. Liffe (founded in 1982) merged
with LTOM in 1993 and then in 1996 with LCE. So in essence this
entire industry has only been old enough to vote in the last
In contrast the LSE is 210 years old and share trading is
commonly believed to have started in the late 17th Century.
With this in mind consider that on August 9 2011 there was
1.54m trades carried out on the LSE, the third highest level,
ever, and three times the average daily trading volume so far
last year. However in terms of values of stocks traded the
average daily turnover to the end of July 2011 was
This article is available to subscribers and registered users
Please log in to continue reading.
Not yet registered? Take a free trial.
If you have already taken a free trial you
have ongoing access to the analysis section of FOW.com including this story.
Log in using your details below to read.
Already have an account? |