CBOT, The Chicago Board of Trade!
Already when I was 30 years old, I studied the OSEU, Option Strategies for End Users, at the ITI, International Trading Institute, which was the trading-educational company connected to the Chicago Board of Trade, CBOT. The CBOT is one of the worlds most prominent derivatives exchanges established in 1848.
Since the CBOT has such a long history of trading – they are very competent and creative when it comes to trading in new eras (think about the evolution since 1848, then you can imagine how they have developed their trading throughout all the decades).
One of the things I learned was exactly this; that you must understand when a new era comes and adjust to the new set of rules that comes along with a new “era”. They always talked about thinking ahead and trading on the implied greeks (the “greeks” in derivatives are math, risk and trading, measurements) – but adjust them with your own analysis of the market at every time.
When you want to hedge your financial assets, you need to understand how the hedge-insurance will work for you in various market scenarios. If you don’t understand it yourself then you have to make sure that the advisor you consult truly understands the hedging instruments. Not every person in a suit has the thorough knowledge that is required (I will give you some examples of how costly a wrong advice can be for you in one of my coming blogs).
AimHill Consulting Group