Ken Roberts Chat

Let's Talk Trading (tm) with Ken Roberts
from November 12, 2002

As we begin this evening’s session, let me state the reason I conduct these monthly chats: to provide you the opportunity to ask questions and pick the brain of a successful, long-time, real-money trader. It’s not the highest and best use of our limited time here together for me to define basic terms and explain introductory principles taught in your TWMPMM Manual. That’s what my Course Counselors are here for... Now is the time for you to use me to help you apply the basics you’re learning and to prepare you for what to expect once you’re out in the market itself (either paper trading or with real money). And if we have some fun along those lines, so much better. Alright... I’ve got a (Cuban!) Davidoff fired up, here’s our plate of freshly baked cookies (made from actual apples from the last known existing apple tree actually planted by John Chapman -- Johnny Appleseed -- in Nova, Ohio, the coffee’s poured, so let’s talk commodities!

macho trader asks:
Redondo Beach, CA: Ken...do you trade the stock market indices (Nadaq100, SP500) in the same manner that you teach in you roundtable videos (these are great by the way)? Do you ever short them?

at 6:17:57 PM
Yes I do, macho trader, but be sure to take a look at trading these particular markets with OPTIONS. Once in awhile you'll find them really, REALLY cheap! Thanks.

The Professor asks:
Hello Ken, Believe it or not, my son introduced me to your course almost two years ago. Your course has changed my entire outlook on what I've been taught. Thank-you for a different perspective Ken. My question relates to the daily and weekly profit levels. Do you ever decide to skip the daily and go straight for the weekly target, and if so why?

at 6:18:38 PM
Yes I do, Professor. Why? GREED, that's why. Thanks!

ML asks:
Are there any markets that you don’t trade options in because they are so expensive? For instance, like Lumber or Pork Bellies?.

at 6:20:07 PM
Well, ML, it hurts, but yes I do trade even the "expensive" markets (when I find "cheap" options in them). Coffee's another of these kinds of markets. And, of course, I NEVER trade options in the Palladium market because there aren't any . . . .

MrG asks:
Reedsville Pa. I have some may coffee calls. My broker suggested that I SELL a couple of them in a recent move to "lock in" profits. How does this work, and should I think about it? Thanks a million!

at 6:22:06 PM
First of all, please use the word "liquidate" when talking about getting rid of an option you already bought (don't want to confuse the word "sell" with "writing" an option). Yes, that's a plan your broker mentioned which is why I liquidate half my options at (usually) the daily 50% level and then hang on to the rest for a larger move up to (for example) the Weekly 50% level. It's up to you. But remember: You can't lose money taking profits . . . .

SirGawain97 asks:
Ken, greetings from Memphis! If I want to lock in profits, instead of trailing my stop loss, why can't i just liquidate my position at the point where i want to take profits and at the same point enter into a new separate contract?

at 6:23:27 PM
You don't gain anything by doing that, Sir...97. Stop and think about it awhile. Thanks!

sastrugi asks:
HI Ken!! When hedging a 123 top or bottom with a call or put, is there a good way of deciding how much to pay for your option? For instance like a percentage of your risk (risk/reqard). Thanks for your help

at 6:24:42 PM
Well, that's one way, sastrugi, but I'd shop that option until I find it's CHEAP. In this way, you'll put your CHEAP option on first, before the futures contract.

israel asks:
Hello Ken. Question. Is it good to trade an option as far out as you can even though the broker keeps insisting that it's very thinly traded? My broker keeps saying that I might have a hard time getting out of that market later.

at 6:27:40 PM
Well, try it out, israel. I've found that as long as my (limit) order's filled and I get that (thinly traded) option, it's not a thin market when it comes time to cash out. Makes sense: If the market takes off, why did it take off? Because now lots more people are looking at (trading) it . . . .

nova scotia newly enriched asks:
Scott from Nova Scotia, Canada. Ken, when tracking a formation on the daily chart do you only chart the front month and then trade a further out month? If so, how do adjust for price differences?

at 6:29:03 PM
Yes I do, nova scotia. I take all my cues from the front-month chart, regardless of the price of the contract I'm actually trading. If you need more input than this, please call a Course Counselor (but think on it awhile first . . . .)

Bruce asks:
Is it appropriate to watch weekly charts especially for 1-2-3 formations, or is this too long a period of time to consider?

at 6:30:16 PM
It's too long for 1-2-3s and narrow, sideways channels, etc. I use the Weeklies and Monthlies for big-picture views and 50% retracement levels only. Good question.

Jon here in Leftyland asks:
Normally I wouldn't ask, but Canadian dollar profit levels have got me second guessing. There are to many small 50% retracements that have been made from 75.51 in the winter of 1996. What would be your first two profit levels? Thanks Ken. J

at 6:34:37 PM
Okay, I'll bite . . . . Let's look at the Weekly: High = 7125 and Low = 6200. 50% = 6662. Not much of a move at all. So stand back and look at its Monthly chart: High = 9200 and Low = 6200. 50% = 7700. That's more like it. So my two levels would be those . . . . Good one!

onearrow asks:
Hi Ken, Is gold going to break out above 330.00? Thanks

at 6:35:07 PM
Yes.

Betty P. asks:
Any suggestions for those of us stuck with an account but still no action to start Paper Trading? Fear? Or whatever?

at 6:36:15 PM
You MUST paper trade, Betty! Do it! Go for it! Break through that (false) wall of fear. You know, F.E.A.R. means "False Evidence Appearing Real" . . . .

richman asks:
Hi Ken. On 10/10 I placed a GTC order for 2 July 160 Oat Puts for 3 pts each. I just missed an entry into the market, they are trading at 11 as of today. Would it make more sense at this point to cancel the GTC order since the market has been moving down?

at 6:37:22 PM
I would, richman. I'd look to place another order for another farther-out strike now. Good going, though. Babe Ruth set strike-out records too!

Coffee Is Celebratory! asks:
From CA, Cotton puts are cheap now, but do you think the 38.20 retracement down on the weekly chart is unrealistically low?

at 6:37:55 PM
Not a bit, Coffee. Go for it!

Cliff asks:
from ct. when you purchase an option for protection instead of using a stoploss - I know you must buy the option in the same month in which you are going to trade a futures contract - my question is how do you choose your strike price for your option - I.E. #1 point, #2 point, #3 point or where? Thank You for sharing

at 6:39:27 PM
As close to your futures entry point as possible, Cliff. You must shop first and put that option on BEFORE the futures contract so you're not exposed to unlimited risk. So the answer is: Whatever your budget allows. Sorry I can't give you one pat answer (there is none).

Rebecca asks:
Hi Captain Kenny! Knowing you are expert in Euroyen, I wanted to ask your advice. I have one Dec '02 Euroyen contract. Last trading day is 12/13, so I need to get ready to roll it into March, June or December. I was thinking December '03 would be a good idea since the market has been holding steady for so long. What are your thoughts? Thank you so much for being here for us.

at 6:41:01 PM
Since the Dec.03 is about as high as the front month, that's what I do too. Thanks!

Colt Smokin Coffee Trader asks:
Hi Ken, Thanks for keeping commodity trading simple,, I have taken a few of the other courses out there. And your right.. All of that hokus Pocus just makes a guy dizzy and intereferes with my cigar time..

at 6:42:35 PM
Good insight, Colt! And remember: God doesn't count the time you spend smoking cigars toward your allotted time here on Earth!

long john silver asks:
Ken I have been paper trading Cocoa (margins too expensive) since its ride down...and it should hit my daily 50% of 1708 by the end of the week, i love how it Just knows where to go

at 6:43:09 PM
Kinda magnetic, isn't it Long John?! Good goin' . . . .

CW from Norman, OK asks:
Hello Ken and Crew: I'm finishing Vol I of Maurice Nicoll's Psychological Commentaries the information is amazing, just wanted to thank you again for Four Star Books! In your personal trading, if you exit part of your position at the Weekly 50% do you protect the remaining contracts your taking to the monthly 50% or if the market rolls over would you ride it back down?

at 6:44:44 PM
I'd protect your position with a long-trailing stop (or use options . . . .) and yes, I'd roll if necessary. (Check out "In Search of the Miraculous" too.) Thanks!

nova scotia newly enriched asks:
Nova Scotia, Canada: Ken, I've been paper trading for two weeks and I'm already fully sold that it is the one perfect business. In the get-going video you spoke about OPIP and conservative assumptions (just intrinsic value). Wouldn't the options be extraordinarly higher priced when you go to purchase them closer to the money?

at 6:45:51 PM
Not necessarily, Nova Scotia. Never assume anything when it comes to option prices! Oftentimes you'll find that "glitch" that others overlooked . . . .

Isocracy asks:
Hi from Victoria......Looking at NG and sugar, does NG always do a spring fall?

at 6:46:46 PM
No, not always, Isocracy. Check out its Weekly chart . . . .

drew from ga asks:
ken do you think the grains are do for a further drop ? corn,oats,etc

at 6:47:15 PM
Yes I do, drew! Be a contrarian!

Da_Contrarian asks:
ken, thanks for everything, youve changed my life, placed first trade last march am currently up over 40k, I loved Rich Mans Secret (book and course), thanks a million for turning me on to Vernon Howard, he has the answers I've been searching for. My question is about Wheat, do u think it will head back over 400 Ive made some great profits in many of the grains these past 3 months?

at 6:48:31 PM
Thanks, Contrarian! Yes I do: Wheat will eventually go to at least 485 (its Monthly 50%).

Phil from Palmdale, Ca asks:
Hi Ken, I'm on my second round of Eurodollar puts(4 98.25 dec. and 2 97.50 march) should I be buying for the third round while puts are still cheap or should I wait until closer to expiration? I'm worried about being priced out if I wait too long as I'm new and trading with limited funds. Thanks Phil

at 6:49:24 PM
From what you said, Phil, I'd wait till about a month from expiration to go shopping for a third round. Thanks for joining us this evening.

Kaery asks:
Hello Ken from Pacific Grove CA. Do you redo your 50% calculations each week as highs and lows slip from view, off your paper chart or do you let the old calculations ride for awhile? Thanks!

at 6:50:22 PM
I let them ride, Kaery (they're really still there --- it's just that the paper ran out!). Good question, thanks!

kristos asks:
KEN ARE YOU LONG SUGAR OR COTTON. IF SO WHATS YOUR UPSIDE TARGET TO TAKE PROFITS.

at 6:51:13 PM
Nope, I'm not falling for it, kristos. Yes I'm long, but you'll have to determine those 50% levels on your own (or call a Course Counselor if you REALLY need help). Good try, though!

philco trading asks:
Hi Ken, I sold (liquidated) 1 1350 cocoa put today for $400. I am holding another and wonder if I should target the weekly/monthly 50% to dump the other or should I set a dollar target? I am using 1350 as the 50%. Paid $50 each for the options. Really enjoy your chats! Philco trading

at 6:52:19 PM
Good going, philco. Do as you wish, but I always wait for my chart target to get hit (which doesn't always work out, but that's what I do). Thanks!

traderboy asks:
Hi Ken and Gang...Good Evening! Enjoying some profits on Mar Cocoa Puts 1700 strike, purchased at 19 currently at 138. Time to unload? Cocoa seems to be at its 50% level, but in a strong donward trend.....THX

at 6:53:19 PM
Since you said "putS", traderboy, it sounds like you have more than one. So why not take profits on one (or some) and let the others ride the market . . . .

Eric in Fort Worth asks:
Hi, Ken. I was long Mar. Sugar and was stopped out (with a profit) during the recent pullback. Longer term, I believe the market is headed higher. What would be your recommendation on how to re-enter this market, e.g., wait for a formation, enter once the 50% level is hit, just jump in now, etc.? Thanks.

at 6:54:39 PM
I'd wait for a 50% retracement (and also check out the call options during this time). Thanks.

gonnatrade asks:
phx,az hey ,ken what about that cmx silver , looks like its been low for awhile , are you in the market futures or options ? my plan is to add options for long term , or to be in the market , what do you think??

at 6:55:36 PM
It all depends upon YOU, gonnatrade, and your budget. But I'd be in it one way or the other (and am).

mo42nark asks:
June bug, Columbia,South Carolina: Ken....do you think $330.00 for an option is too much!

at 6:56:16 PM
Not if $330 is "cheap." Only monitoring any particular market can tell you this. Did you do that?

CamaroGuy asks:
Lumber - how would you enter this market? The farthest out calls are March03, and they still look too expensive - especially for that limited amount of time. But lumber never has options farther out than 6 months. Would you just wait for cheaper options or would you buy any now?

at 6:57:12 PM
Well if I put bids in now, my order would be to pay HALF of what I determined "cheap" to be.

kts in vancouver asks:
Hi Ken. I believe you said in one of the chats that you could bid for an option that doesn't exist and create it. My question is, if an option had gone to cabinet could you still try and liquidate it at a price between the listed options that were above and below it? Thanks for keeping things simple.

at 6:59:06 PM
You can always try, kts. Your broker MUST present ANY order you give him/her. But in the situation you describe, that order might sit there awhile until the underlying futures market begins moving (if it ever does). Try it . . . .

Rich asks:
I got stopped out of coffee at $54 and missed the ride up. What do you recomend? Is finding the retracement at 62 the time to jump on board? thanks for your advice. It would be a shame to wait so long for a coffee move and then miss the whole thing because of a misstart..

at 6:59:42 PM
Yes it would, Rich. I'd price calls now --- they're CHEAP!

haliburtonbob asks:
I bought two call options for March sugar at .07, the daily 50% level was hit,however, since the profit was minimal (after commission) I didn't sell. Should I have sold one contract anyway to protect the downside or should I hang on until the weekly 50% is hit to sell both?

at 7:00:58 PM
There's no right answer to your question, haliburtonbob. But here's a tip: Make your plan BEFORE you enter that market and then stick to it no matter what! This eliminates a LOT of emotionalism. Thanks!

choffa asks:
Are you still in Wheat?

at 7:01:05 PM
Yes.

krispy_kreme asks:
David from Houston - At your Sep. chat I was whining about not being able to get into coffee. The next day I bought 3 march 190 calls at 20 pts., below my bid price. Since then I have bought May and July 150 calls, also below my bid price - Amazing! Thanks for the Help.

at 7:01:58 PM
Thank YOU, David. You did it! (Hey everyone in the chatroom tonight: Are you seeing what David did???)

CooCoo for Coffee! asks:
Thank you Ken for recommending holding on to my coffee contracts. I had five contracts and rode it up the last ride selling off contracts one at a time taking profit along the way. I had sold them all before the last peak so when the market retraced back downward I bought back tow of them to hang on to for the weekly and monthly long haul. How's my strategy sound? About right? Thanks for your gift of knowledge!

at 7:02:36 PM
Sounds great to me, CooCoo. Good goin'!

wal88 asks:
Are you still long coffee??

at 7:02:49 PM
Absolutely!!!

CW from Norman, OK asks:
Does the lack of a long price history affect the way you trade a market? For example, Rough Rice has only traded 9 or 10 years.

at 7:03:36 PM
To some degree, yes it does, CW. But rice is still really, really low now!

stretch asks:
Hi Ken, greeting from north of 60. Yes it is cold up here. Love your chats and I am making money from what you taught me. When I make the first million I am coming down there and I will bring you a big box of cuban cigars. Stretch in Whitehorse Yukon

at 7:04:30 PM
Alright, stretch! Thanks! (Don't get hung up in Customs with that box of Cuban cigars, though . . . .)

moneybags asks:
ken do you ever trade from grain reports or just your charts.thanks love your chats

at 7:04:42 PM
Just my charts.

KoKoPutz asks:
Hi, Ken! Thanks for all the work you do - You make the markets understandable -and fun - not to mention opening doors to the spiritual side of life. Have studied futures and options, and as of now have only ventured real money in options. Bought four July '03 1400 Cocoa Puts for 10 pts each, and today they're worth 72 pts! When the price drops below 1708, I'll liquidate two, and I'll hold the other two 'til they near my strike price. This is a lot of fun! Can't wait to get home each day and check my 'Trade Tracker' Thanks again, and I hope to thank you in person, someday.

at 7:05:39 PM
Yes, come on out and see us, KoKoPutz! Great goin'! Thanks!

kristos asks:
KEN, ME AND MY BROTHER GEORGE ARE JUST SHORT, SHORT AND SHORTING MORE AND MORE EURODLLAR CONTRACTS. IS ANYBODY ELSE SHORT, OR ARE WE THE ONLY ONES? TO US IT LOOKS LIKE A TREMEDOUS OPPORTUNITY TO MAKE GOOD PROFITS IS POSSIBLE IN THE INEVITABLE COLLAPSE. ANY THOUGHTS KEN?

at 7:06:03 PM
I agree 100%.

WHEATSDOWN asks:
Ken,thank you for all your help in commodities. just wanted to let you know i made $7000 in 4 months and most of it in the last 5 weeks!!thanks again.

at 7:06:25 PM
Thank you, Wheatsdown. (YOU did it.)

Ron from Alaska asks:
Ken: Loved "Tools of the trade" Wondering how you are coming along on the new project you were working on a couple of chats ago? Any clues as to what it is that you are working on? Also, are you long lumber. Futures or options? If yes, did you recently get in or have you been in. I just got in. (March @ 243) Thanks Ron

at 7:09:28 PM
I'm in Lumber (futures) now. Ron, just wait'll you see what I've been working on. (It's SO exciting I'm wearing Depends lately . . . .) OPENING DAY for the BRAND NEW WEBSITE is scheduled for January!!!! Can't wait to show you!

Bruce asks:
Bruce from Alberta again: If gold is going up, will silver follow?

at 7:10:33 PM
Each market is its own essence.

Bob in St. Louis asks:
Ken, I recall from your promo for the TWMPMM 1 course you mention that you began your trading career with $600 and a sugar contract, I believe. If you were starting today with that same $600, what market would you choose and would you trade a contract or an option? Thanks for the help.

at 7:11:21 PM
I'd trade OPTIONS, Bob, and would that have been great back then! Everything just keeps getting better and better in this business . . . .

Mike In Yakima asks:
Hello Ken! I am new to all this, A member 2 months now. Signed up for online charts a month ago, I love the interactive charts feature. Still paper trading, and purchased a 1800 put in march cocoa Oct. 14 which is now worth $1673 - WOW Now I understand how options gain in value even if your strike price hasn't been reached yet! Thanks so much for the education!

at 7:12:08 PM
You said it much better than I could, Mike. Thank you!

Russ-Malibu asks:
Dude, Good to have you back in Malibu again. I finally cashed in the balance of the CLZ2 (Dec. 2002 Crude Oil) that I've been holding since February. Great trade! Great Porsche! I just went long GCZ2 (Dec. 2002 Gold) on a "mid-contract" 1,2,3. That is: July #1 300, August #2 320 and August #305. I got long 321.5 when it broke above my #2. It's been very choppy but we're still up a few hundred per. Based upon a "recent" monthly 50% of 335 I feel good about this trade. I find that sometimes I don't have to wait for the contract low #1 to get in as long as the rest of the chart looks good. Whaddya think?

at 7:15:04 PM
You da man, Russ. That's what I think. (I just ordered a 2003 Infiniti G-35 Sports Coupe today. Bet I can beat you in that Porsche of yours . . . .)

Gil asks:
1. Hafa Adai Ken! It’s Wednesday and I’m having my lunch here in Guam (Where America’s Day begins). I’ve had the TWMPMMII course since approx. 1995 and I’m finally doing something about it! I’ve been paper trading consistently/successfully (Short CL and O) for over a month now and I look forward to the real money in a couple more months. My question is: To determine if I’m bullish or bearish what type of chart (monthly, weekly, daily) should I use to determine the 50% retracement level? To find the correct 50% retracement level do you take the average of the monthly, weekly, and daily contracts?

at 7:16:58 PM
Thanks, Gil. Glad to have you with us (and glad you stuck with it). I start any trade with the Monthly and Weekly charts, but call a Course Counselor and run through the steps with him/her. Keep on keepin on!

SirGawain97 asks:
Ken, should one paper trade EVERY market that one thinks is tradeable? or should a beginner like me just concentrate on a few, like the ones from Alert Line! and the monthly Newsletter?

at 7:17:35 PM
Paper trade all you can, SirGawain97. We can ALWAYS learn more . . . .

geedub asks:
I have heard 90% of all options expire worthless, in my experience it is 100%, so it dosen't matter how cheap they are. It is just a matter of how many dollars you lose. any comment?

at 7:19:06 PM
Go back to paper trading them, geedub. It's probably true that 95% (or more) DO expire worthless, but those that don't --- that's what we're doing this for. (Read some of these comments posted here this evening for some inspiration . . . .)

The Jack of Trades--Union City, GA asks:
Hello Ken: Would a 98.00 March Eurodollar put make sense, as far as the strike being well above the 50%, even though there's not much time left? I paper traded this method on Wheat (Dec. 380 call) and my "paper" $125.00 option turned into a "paper" $2200.00!!! If only it could've been real....Your thoughts, please...

at 7:23:15 PM
Sure, try it, Jack of Trades. Price and follow other options too, but I know Course Members who trade this way EXCLUSIVELY. Thanks!

N.C. Contrarian asks:
Ken, Would you explain what you mean by "gunning for stops" ?? Thanks.

at 7:24:38 PM
That refers to the floor traders (knowing where open orders for stops are placed) moving the market to trigger those orders (thus creating more business for him/herself).

mike asks:
Hey Ken, Mike from Alaska here, in your opinion, is coffee making some sort of formation, or is it still just brewing?

at 7:25:30 PM
I think it's percolating here at the bottom, getting ready to EXPLODE to the upside! Thanks for logging on this evening.

Ninja asks:
Hey Ken based on the recent pullback in crude oil would you be looking to buy some far out call options at this time?

at 7:25:54 PM
I'm not, but that's a sound plan. Good one, you Ninja Contrarian!

dxw asks:
When looking through a chartbook with the idea of using options in a long-term position strategy, I get the impression that basically any market can be traded. Is this an accurate perception?

at 7:27:03 PM
Yes, except Palladium which trades no options.

Blue Rose asks:
Melting in CA- Which market do you see to be the most profitable one where the margin is not too expensive? I have checked my charts and done some figures but I want to hear from the teacher.

at 7:27:57 PM
Don't overlook options, but also take a look at the Euroyen market.

John Kirsch asks:
Ken, Just wanted to let you know I stopped trading about two years ago after a broker broke me. lost 5k in about 6 months. I broke your rule of never let a broker talk you into making a trade! I did and I learned my lesson. However I knew if I had only listen to you I could have still been trading. I was determined to trade again your way, saved some money and opened an account about 3 months ago followed the course and made over 1k on my first trade when I shorted March 03 wheat 123 top. This really is'nt brain surgery! Thank you John Kirsch

at 7:28:37 PM
Good one, John. You da man!

Tahoe Clay asks:
Hi Ken and Crew!! I am a little late signing on because I just now got back from Chicago!! I had to shovel a little snow berm at the end of my driveway before I could get to the computer. I went to the CME on Friday and yesterday!! Too bad they were both "holiday" days on the trading floor, it was a little slow according to a "Local" I was able to talk with. The funniest thing was when this Local started asking me all sorts of funny mental questions about the way I am trading, and I broke out my U.S. Charts from my back pocket, and told him that I am a contrarian chartist..... anyway that stopped all his questions that I didn't know the language to. Speaking of Language, it was sure interesting to see the pit traders trading contracts with that sign arbitrage language..... I am rolling my Dec Coffee tomorrow for some "gainback". Boy do I love it when my Mar 03 and May 03 coffee calls that I paid 30 points for get volatile and become worth 6 times or even 7 times what I paid...

at 7:30:37 PM
Great goin', Tahoe Clay, and welcome back! (My daughter Nikki was just in South Lake Tahoe at a wedding this past Sunday --- and just missed the snow, I guess.) Isn't that Exchange something?!

porteno1 asks:
Hi Ken I just want to express my gratitud to you and for turn me on to the WORLD PERFECT BUSINESS!!!! Thank you!

at 7:31:00 PM
Thank YOU, porteno1. Glad you "had ears to hear."

Tundra asks:
Ken, do you trade the Rice market at all?

at 7:31:24 PM
Sure do, Tunda. And it's REAL low now . . . .

mike asks:
Hi Ken, Mike from Alaska here, I think they should make snow a commodity! We don't have any yet so that would drive the price up, right? Always scheeming!

at 7:32:01 PM
Yes it would, Mike. Good thinkin'. (I do believe we'll see water traded as a commodity sooner than later . . . .)

traderboy asks:
hey guys...when you wish to place an order for numerous options (i.e. 50 or more) would you be better off doing this in increments of 5 or 10 to get filled? (am not trading at this level yet, but someday.......)

at 7:32:43 PM
It all depends upon the particular market, traderboy. Some can handle orders of 50 or more and some just can't. Good question.

stretch asks:
Hi Ken, Stretch from north of sixth. Talking about cheap options, arn't you just actually setting a price you want to pay and waiting for the market to come to you, or what?

at 7:33:30 PM
Yes, but "setting that price" involves determining what "cheap" means in that particular market first. Good question.

Jim from Kalamazoo, MI asks:
Did you ever think eurodollar would be this high ?

at 7:33:58 PM
Nope, but new records seem to be hit every year in this business . . . .

MontereyTim asks:
Hi Ken! I’ve been pricing a lot of different optioins lately...Sugar 550 puts, Canola 410 puts, and now Live Cattle puts. My options plan is going well. I have some Coffee calls, as well as Eurodollar puts. My question is: Why are there so many different options and strike price choices available in markets such as Sugar, Canola and Eurodollar, while in Live Cattle there are so few available? In cattle they went only as far out as May 2003 for puts, with a choice of 4 strike prices available, and only a few calls available in Aug 2003.

at 7:34:59 PM
Fewer traders, MontereyTim. It's all about supply and demand, including option selection. Good question.

drew from ga asks:
ken are you in copper?

at 7:35:24 PM
Yes. I'm long and hanging on.

Got Coffee? asks:
To kristos: You ain't the only one shorting Eurodollars...I'm going AT LEAST a year out on puts in this market though!

at 7:35:35 PM
!

Keeping on... asks:
Ken, I know you get lots of thanks, but I want to thank you too. I was laid off from a dot.com company last February and I haven't commuted another day to a job. I am doing my commodities and loving every minute of it. Started with just 10K. I will be taking out 8K in profits tomorrow in cocoa only. Just playing with options. Fun stuff!

at 7:36:05 PM
Thanks! And good goin'!

Sonrise 80/20 asks:
Bob in St. Louis wanted to know what market you would choose TODAY with your $600...so what is it :-)...

at 7:36:41 PM
I'd spread it out over several markets using options, Sonrise.

GYPSY WOMAN asks:
Been thinkin' about that $17.00 Tree Kit of yours - since we are moving (crossed fingers!) into a condo w/only 2 balconies next spring, is this something we could use on a balcony, Ken? Concrete jungle not-withstanding, I still have to earn a living, but am an environmentalist, at heart!

at 7:37:32 PM
Absolutely, Gypsy Woman: DWARF trees! (No kidding . . . .)

mike asks:
Hey Ken, Mike from Alaska here, when are you going to do a boardroom or seminar up here in the great land?

at 7:38:02 PM
Nothing scheduled, but you never know (maybe even a cruise Boardroom) . . . .

willco asks:
Hi Ken Do you think soybean oil is poised to make a move. My paper trading tells me to watch for it. thanks

at 7:38:39 PM
Yep, it should make a 50% retracement back down.

Tombo asks:
Ken, in the last chat session you answered several questions about "hidden stops" (I think that's what you called it). Can you give a brief explanation of what this is? Obviously, my broker needs to know where I want out, but how does this work without the floor broker knowing?

at 7:39:56 PM
I call them "silent" stops, Tombo, and ONLY my broker and I know it. When the futures market hits that price, my broker then calls the order in. Obviously, this requires the cooperation (and attention) of your broker, so make sure you have a good one (and are paying him/her well). Thanks!

Rado asks:
Dear Mr.Roberts I do not speak English well,but becouse of you my money Talk. Thank you,SIR

at 7:40:17 PM
Thank YOU, Rado. Keep talkin'!!!

Ed asks:
Ed in NewHampshire Ken,I have heared you say it,"DONT LISTEN TO YOUR BROKER". I have been in bean oil since the summer of 99 and early one evening this past summer my broker called with a bit of an attitude asking what i planned on doing with my bean oil positions.This was about the begining of June and the market had risen to 19 on the weekly chart. I said my plan is to liquidate at the weekly 50%,and his reply was where is that,so i said at 21.90. He said he just didnt want to see me loose money. I said i appreciate your concern but i will stay the course. After i hung up i told my wife one day soon i will take great pleasure in calling my broker (not one of his assistants) and have him liquidate my positions and rub his nose in it. That day came on 10-30-02, and i asked him if any other of his clients were still in oil and he said i think you're the last one and it looks like you've done the best. Boy that felt good.....

at 7:41:23 PM
It sure felt good hearing you tell us about it too, Ed. THANKS!

Brett in Dallas asks:
Ken, thanks for these chats!! I've got 2 May'03 1350 Cocoa Puts and 1 July '03 1350 Cocoa Put. This is the first time I'm making money in options, that I'm not sure when to liquidate.

at 7:42:10 PM
Try a DAILY and a WEEKLY 50% level . . . .

Phillipgs asks:
Hi Ken! Ive made $55,034.50 (on paper)in the past 6 months trading simple 1,2,3 bottoms etc. I traded exactly as I would in real life starting with 2 contracts in market a doubled up each contract order using stop-losses (im not a real man yet). So now I am trading my first real contract in oats going short have any advice for me now?

at 7:42:47 PM
Keep at it! Sounds like you're doing great! Thank you!

Hotdog asks:
Hello from Utah, Ken. OK, it sounds an awful lot like I need to learn some more about options. Which course do you recommend for my next step? I have only studied the TWMPMM I course.

at 7:43:40 PM
You can use the option strategy right there in TWMPMM I, or move on to TWMPMM II. Don't be intimidated; just get going! Thanks!

Ninja asks:
Hey Ken When you trade a market do you ever trade both options and futures. For example long futures and calls in the same market? what about coffee currently? thanks for your time here each month

at 7:46:40 PM
Yep, Ninja, I do that all the time (just can't help myself!) . . . .

smokeeater asks:
Ken, When will you have " The Ken Roberts autobiography " on the New York times Best seller list????

at 7:47:09 PM
Thanks, Smokeeater, but I don't think that'll ever happen. (Pretty borning story . . . .)

Anchor asks:
Ahoy, Ken, from the Atlantic Ocean, East of Trinidad! Installing pipelines to keep those oil & gas prices coming down (SHORT!). Hope you jumped on a boat load of Coffee options on 10/9 & 10/10. I tuned in too late, that Thrusday, and missed the boat. Have been whining ever since, but I'm still holding previously-acquired options, and looking for another querk in prices.

at 7:48:11 PM
Alright, Anchor! Thanks for joining us tonight! I think you'll get another chance at those cheap coffee calls. Just keep monitoring . . . .

mary asks:
Mary from Toronto, Hi Ken, I've noticed nobody is talking about the cattle market tonight, do you think it'll turn down soon? I'm thinking of going short but need a little assurance from the pro. Thanks a million!

at 7:49:29 PM
I AM short, Mary (but your budget must determine your trading). Try pricing those put options too. Thanks!

tymo asks:
Hi Ken; Tymo from Colorado here. My Oct. '02 Sugar options expired in late Sept. & I failed to get back in for the second round. Since Sugar kind of took off without me, should I just wait for a pullback to get back in? I know you always say,"Never chase the market". Think this would work? I want to be in the market.

at 7:51:23 PM
Sure, it COULD work. You'll just have to price those call options on setbacks. Stick with it!

Rickeroo asks:
Hi Ken! Rickeroo from Iowa. Mucho thanks for all you do! Question and possible strategy. In long term options trading, if daily target is hit and we liquidate half, BUT weekly target isn't hit, do we buy a 2nd round hoping for market to hit weekly? Strategy: 3 clearly defined targets: daily, last barrier, and weekly. Purchase options in sets of 3. What do you think?

at 7:52:24 PM
Both sound good to me, Rickeroo. Try them . . . . Yes, I buy a 2nd round hoping for the market to hit its weekly target too.

Jim from Kalamazoo, MI asks:
Besides Eurodollar, what other extreme markets are there right now ?

at 7:54:14 PM
Euroyen, rice, T-Bonds, T-Notes, Libor, (to name a few) . . . .

scottnhouston asks:
Hi Ken & gang. When hedging with an option I know that you want to purchase "insurance" (i.e. option) before entering a futures contract. Now for my dilema (and I researched all your course materials but did not find an adequate answer), please correct me if I am wrong but if I were to hedge a potential 1-2-3 bottom I would first buy a put as close to a #2 point as possible. However, being that this option is so close to the #2 point which is presumably fairly close to the market price then this put can be extremely expensive, especially if the futures contract does not make the "big" move. While I do realize that by having this put I can sleep comfortably at night knowing that I have limited my loss, but I am having trouble overcoming the expense of the option. Am I on the right track? Thanks.

at 7:55:59 PM
Yes, you're on the right track, scottnhouston, but consider this: You'll get your best price for that put option when futures are rising. That's typically a rise from the #1 bottom point to the #2 point. Good question.

baugh123 asks:
Ken, I'm just getting started with real money. I bought 4 June put options in Eurodollars at a strike of 97.75 (8 pnts). I plan on buying more in three months (or if they get really cheap on the Sept). What is your impression on the Euro? Also, do you think the Coco will retrace back up soon because it has surpassed the daily 50%? thanks Ken! Greg Baugh

at 7:57:16 PM
Sounds like you're doin' it just the way I am, baugh123. Trade on! (Yes, I'm expecting another rally in Cocoa too.)

sastrugi asks:
So you are saying when hedging... to buy the cheap option first before buying the futures contract in the same market?

at 7:57:57 PM
Yes. Otherwise, you're exposed to all that risk of a "naked" futures contract.

corky asks:
Since Canola oil still seems to be in a up trend and hasn't yet made a 123 top, how could you best trade this market?

at 7:58:21 PM
Start pricing PUT options.

CooCoo for Coffee! asks:
Ken, Do I remember correctly? Did you once say that you don't trade the Bond, Bills, and Notes Markets because of those ridiculous 1/32 points? Or, am I hallucinating? How the heck do you figure out the retracements on those darned 1/32 points!?! Thanks, Fractioned!

at 7:59:10 PM
Yes I did say that, but I DO trade them (I just don't like making the computations!).

Pete asks:
Hey Ken. It's about time coffee finally made its move. I have been waiting a year for that move. But it was worth the wait. Made some nice profits. It also taught me what you have been saying all along-have patience, not the easiest thing to do. But very important. Thanks again, Ken. I love all your stuff and am an avid chartist.

at 7:59:41 PM
Beautifully put, Pete! Thanks . . . .

bohemiantrader asks:
Ken, after paper trading for 2 1/2 years, I opened an account in October. In 9 business days I have more than made back what I have spent on TWMPMM I & II and U. S. Charts Online, Ted Warren Course and Rich Man's Secret! Thank you.

at 8:00:05 PM
Good goin', bohemiantrader!

dufus asks:
Have you ever been caught in a limit move

at 8:00:30 PM
Sure, lots of them (and I lived to tell about it)!

Carribean Craig asks:
Ken, A broker/buddy of mine noticed i've not been working for awhile and asked what I was up too. I said futures trading. He said who taught you. Naturally I said the great Ken Roberts ! His response was you'll lose your ***. I told him I have cashed over a 100 grand this year and have another 40 thou in coffee positions. Then he asked for info on the courses ! Go figure.

at 8:01:18 PM
Yep, that's the common man, Carribean Craig. Go figure is right.

Got Coffee? asks:
Ken, I'm having so much fun being a "chartist" now!!! I have studied the daily, weekly and monthly Coffee charts and here's an observation to share (Kinda' long but helpful I hope): On the Weekly chart, between June 2001 and Sep. 30, 2002 (a 16 month period) Coffee has been in a narrow sideways channel. Since Mid-October, Coffee has done a break-out from the narrow sideways channel, and is fluctuating ABOVE the current Daily 50% of 61.60. Looking to the weekly chart history, between May 1982 and Nov. 1985 (42 months) and June 1991 and April 1994 (34 months) coffee was in a relatively narrow sideways channel...and then shot way up. We're due for another big rise and I'll be ready with my Sep. 2003 options!

at 8:02:51 PM
I'm with you, Got Coffee. Good one!

gratefultedhead asks:
Hey Ken and KRC gang- I bought July 1600 cocoa puts about a month ago. With the subsequent drop in price, I plan to sell half of my position at the 50 % daily (I have it at 1710 for March) - which could happen tomorrow. But the way Cocoa's been moving, if the futures cut through the 50% daily like butter, should I hold out till it stutters? 50% weekly wouldn't be far below at 1535. Thanks to you and Ted for all the teachings.

at 8:03:40 PM
Alright, gratefultedhead! I'd wait for the Weekly 50%.

Tombo asks:
Hi Ken, what does "cash settled" mean in respect to first notice dates on a futures contract?

at 8:04:57 PM
It means there's no delivery made or taken on that commodity (so you don't have to worry about some truck backing down your driveway filled with some commodity). That market is settled in cash --- just an accouting entry added to or deducted from your account. Good observation.

mike asks:
Hi Ken, Mike from Alaska again,was wondering, as long as they keep lowering interest rates, can we expect Eurodollar to keep going up?

at 8:05:22 PM
Absolutely, but they can't go down MUCH farther . . . .

Sign Me Up asks:
Rocket Rod form Indiana Ken I know you are a drummer and I was wondering when MTV "Cribs" are coming to Southern Oregon? Would you really do it if they would ask? Rock on! Commodities Rule!

at 8:06:15 PM
I might, Sign Me Up, send them on over . . . .

need$$ asks:
need$$ from Sandy,OR Ken, will just say thanks for everyone tonigt, you have made many people very happy and independent Ken

at 8:06:32 PM
Thanks!

Bonita Joe asks:
Ken - Sometimes the overnight markets are dramatic in moves. Even though these aren't charted, could these be considered? I know you don't trade these, but gold and a few others are making some moves. Thanks -Bonita joe

at 8:06:55 PM
Sure, Bonita Joe. Ask your broker to fax you their charts.

Russ-Malibu asks:
Dude, Do you really think your 2003 Infiniti G-35 Sports Coupe can beat my 320 HP Porsche? Tell you what, when you receive it and get it broken in we can test your theory. Winner gets a free ride on one Crude contract, limit up or down $1,000. That would be really fun and give me a chance to meet you (assuming you can catch me). Any secluded roads up there? You gotta love it.

at 8:07:56 PM
Absolutely, Dude! Remember: It's not horsepower that determines the winner; it's COMMITMENT. You're on . . . .

mike asks:
Hi Ken, Mike from Alaska here again, just wanted to thank you for these chat sesions, due to my work schedule this is only the 2nd chat room I've ever been able to participate in, but I read everyone! I commute 300 miles to work every 2 weeks, and Tuesdays are always my travel days. Have been in commodities a couple years now, and done fair, but I know my day is coming!

at 8:08:33 PM
I do too, Mike. Thanks for logging on. Keep at it!

tburro3356@aol.com asks:
Hi Ken! Just a couple of quick questions... Do you own options in DEC lean hogs. After today's pullback of -1.72, would you liquidate or do you see that market stretching out.

at 8:10:35 PM
No, I own no options in Hogs. I'd hang on for the Weekly 50% (and if you're in options, that's no sweat!). Thanks.

Hotdog asks:
Hello again from Utah, Ken. Just a comment: my father told me years ago, back when I was a yonker, that if I found a job I really liked, I would never have to "work" another day. Thanks to you, I think I've found that job - I love this stuff! Thanks a million!

at 8:11:07 PM
You're welcome, Hotdog (you little yonker you)!

Steve from Wyoming asks:
does it seem odd to you that bean meal has been trending down while beans and oil are trending up. shouldn't we expect meal to follow suit?

at 8:11:48 PM
As I've often stated, "Every market has its own essence," grasshopper . . . .

CW from Norman, OK asks:
Hi Ken, If you were banished to a desert island and could only take three books, which would they be?

at 8:12:54 PM
The Bible, Vernon Howard's Mystic Path to Cosmic Consciousness, and How to Build a Boat.

Well that's it for another month. Here are my favorite web sites if you're interested: www.wildlifeimages.org; www.LP.org ; www.uschartco.com ; www.fourstarbooks.com. ; (new!) www.historictrees.org. ; (even more new!) www.foxnews.com/oreilly. My next chat will be Tuesday, December 10th. Also remember Matt's stock and commodity chat next Tuesday, November 19th. As always: Use these newfound powers only for Good. Good night!

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