how can i apply Cost-of-Carry theory to analyze futures market in reality?
545243
The cost of carry refers to the lost opportunity cost of purchasing a particular security rather than an alternative. For most investments, the cost of carry generally refers to the risk-free interest rate that could be earned by investing currency in a theoretically safe investment vehicle such as a money market account minus any future cash-flows that are expected from holding an equivalent instrument with the same risk (generally expressed in percentage terms and called the convenience yield). Storage costs (generally expressed as a percentage of the spot price) should be added to the cost of carry for physical commodities such as corn, wheat, or gold.\n\nThe cost of carry model expresses the forward price (or, as an approximation, the futures price) as a function of the spot price and the cost of carry.\n\n\nwhere F is the forward price, S is the spot price, e is the base of the natural logarithms, r is the risk free interest rate, s is the storage cost, c is the convenience yield, and t is the time to delivery of the forward contract (expressed as a fraction of 1 year).\n\nThe same model in currency markets is known as Interest Rate Parity.\n\nFor example, a US investor buying a Standard and Poor's 500 e-mini futures contract on the Chicago Mercantile Exchange could expect the cost of carry to be the prevailing risk-free interest rate (around 3% as of June, 2005) minus the expected dividends that one could earn from buying each of the stocks in the S&P 500 and receiving any dividends that they might pay, since the e-mini futures contract is a proxy for the underlying stocks in the S&P 500. Since the contract is a futures contract and settles at some forward date, the actual values of the dividends may not yet be known so the cost of carry must be estimated.
74863
If anyone knew in great detail the answer to that question they could make millions of dollars by purchasing futures contracts on the minimum margin requirnment. \n\nThey only way you can get an answer to that question is if you wait three months and check The NYMEX Crude Oil futures quote.\n\nOr refine your question to something that can be answered.
296508
In point of view STP approach is probably the best solution. Check www.stpinvesting.com and you'll find it for your own.
766349
i've based my answer on a probability tree i've drawn.\n(i may not be right!)\n\nProbability both stocks go up\n= 17/25 x 10/17\n=2/5\n\nProbability neither stock goes up\n=8/25 X 6/8\n=6/25\n\ni'm not too sure about the following answers (haven't learnt conditional probability):\n\nIf Gateway goes up, what is the conditional probability Micron goes up?\n=(10/17) / (17/25)\n=250/289\n\nIf Micron goes up, what is the conditional probability Gateway goes up?\n=114/272 x 17/25\n=57/200\n\nIf Micron does not go up, what is the conditional probability Gateway will go up?\n=155/272 x 17/25\n=31/80\n\n\nAgain i may not be right!
550682
Oy that is a great question.  I take it you taking a risk managment or a derivative course! ;)  Basically you would have to put in functions (functions of interest and volatility variations) for both and then evaluate it accordingly.  It is nearly impossible to do by hand but computer can provide you with some good insight :).  That's when 3D probability that engineers love so much kicks in.  \n\nRival
468610
You can go to this website and click on technical analysis and they will tell you. They use 30 day moving averages, MACD, stochastics, and volume. However I will warn you many experts such as Warren Buffett and Peter Lynch consider technical analysis worthless.
598926
The stock is still in a strong downward trend.\n\nIf you observe on the chart, you will notice 2 trend lines, one is still showing a strong downward trend and the other acting as a strong resistance.\n\nI suggest buying when both trend intersacts and purchase at that price, or you can drop me a mail if you require further analysis.
562252
Nobody knows which direction the market will move in the short term.  Indicators that have any value will immediately move the market, since market prices are based on expectations of the future.
1048664
See WorldCom and Enron....\nTraditional financial analysis overlooked the simple facts of financial analysis techniques...
53627
I would suggest that you try a free trial game first to see how you do, after all wouldn't it be better to lose money on a program (or on paper) than in real life? Also, you can learn that way. Here is one: http://compsimgames.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=compsimgames&zu=http%3A%2F%2Fwtc.wallstreet-challenge.com%2F\n\nI do know that you want to shop around to see how much each transaction will cost. That's about the extent of my knowledge...hopefully someone will come along to give you more advice.
256690
Buy a one month subscription to stockcharts.com for twenty bucks.  Use their advanced scan engine to search for stocks with a large average true range (ATR).\n\nThe list will change over time as trading activity changes.
29172
The futures prices for the metals themselves--steel, aluminum, copper, etc.  If I could tell you leading indicators for the futures that always worked then I could retire.
401395
Way to go Arbitrage!  Oh to funny guy- yeah we get that E=MC2  IS a formula- but if you really want to "get it" Check out Maxwells equations. It's a great time to be a science nerd with all this info pouring in now! Figure it out & go up one on Albert!
21474
Yes, but not in the way that you are looking for. \n\nYou cannot accurately predict the exact future price of most financial markets, however there are things about markets that are, or may be predictable, like their long term trends, volatility, etc.
1003632
Here ya go:\n\nhttp://www.advfn.com/p.php?pid=commodities&cc=US&refredir=1&nopu=7M3QB%2BHE0y6hTGQhlEp7%2FVKaIh%2FBzoP%2BnsaIR%2FdsdTWnEvJInj968IWMQSybT%2BSR
495533
Good luck, dude.  If you're asking for commodity trading advice on Y!A you'll need a great deal of it.  (Luck, that is, not advice.)
408301
10 times double, huh. Talk to a stock broker. Futures in food and gold are good but that's a pretty high goal to obtain. Good luck.