By Jonathan Berkley

If you are running a business today, it is most likely that you have eyes on China. This is the fastest growing economy today and most big brands from Nike, Starbucks, Ikea, Apple and Coach to Adidas are moving to the country. Whether you are a startup or you are expanding your business, the opportunities in China are tremendous. According to the top brands in China surveyed by Business Insider, the trick in making it in China simply lies in learning the local language, Mandarin.

With over 1 billion speakers around the world, Mandarin boasts the title of the most spoken language in the world. If your business is expanding to the Chinese market either as an importer, exporter or a consultancy, you must invest in learning the local language. There are myriad reasons to learn the language if your business is to succeed in China. Take a look:

1. Respect to Business Partners

Forget the numbers for a moment and look at the opportunities that you will earn through local connections. Your business partners in China will love the fact that your staff has some knowledge of Mandarin. Like in all oriental cultures, respect plays a big part in business and most deals are closed not just on the profitability but the respect shown during negotiations.

2. More Local Appeal

Chinese is spoken by millions of people and most of these are in China. If your employees can use the language, it becomes easier to interact with the target audience. Most Chinese have not yet adopted English and it is up to you to invest in Chinese tuition which will help your staff interact with the local community. The more people you reach the better and this will give your business a local touch leading to more foot traffic and conversion.

3. Understand the Culture

Language is the most important aspect of culture and if you want to trade in China, you better learn the culture fast. Through language training, you will understand the nuances of culture. (more…)

By Chris Ebert

loverboyWith Triple-Witching coming up in a few days, as it does late in March, June, September and December every year (the expiration of several Futures and Options contracts near the same date) many traders of those contracts will be “working for the weekend”.

If equity or commodity prices have risen or fallen substantially, sellers of many derivatives contracts will be obligated to take actions to protect their portfolios – most notably by buying the underlying root of the contract so that they can deliver the promise made in the contract.

While futures contracts generally have very good liquidity, allowing traders to exit expiring contracts with ease, options contracts often do not have such liquidity. As a result, options sellers can find themselves in a peculiar dilemma in which they must buy or sell stocks to meet the obligation of an expiring options contract.

A Call option seller, for example, could be required to hand over 100 shares of the underlying stock at Triple Witching this coming week, provided that option expires in-the-money. Whether the option expires in-the-money or not will depend upon the closing stock price this coming Friday. When stock prices rise, Call options contracts tend to end up in-the-money.

If the weekend comes without an increase in prices, many of those derivatives will expire worthless. But if there is an increase in prices, derivative sellers, particularly equity Call options sellers, could be compelled to purchase stocks to meet the obligations of their contracts.

It stands to reason that the following week will be one that is controlled by derivatives. Although news will likely act as the initial catalyst to drive stock and commodity prices in the following week, the reaction from derivative sellers could determine the final outcome.

Any large increase in stock prices could fuel an increase in buying of equities by Call option sellers needing to meet their obligation prior to Triple Witching. That would serve to bolster an already-existing rally. By the same token, any significant sell-off could cause Put option sellers to sell or short stocks in order to have the financial capacity to have stocks “put” on them when those contracts expire at Triple Witching; and that could make a sell-off more intense than it otherwise might be.

The end result is that whichever way stocks move this coming week, derivatives are likely to exacerbate that move. Options and Futures are no more likely to drive the market this week than any other week. But, whichever way the stock market ends up going, these derivatives could certainly make the move much bigger.

Big moves happen quite often near Triple Witching, as is to be expected when derivatives traders are compelled to buy or sell to meet contract obligations. It is quite possibly the cause of the recent volatility that sent the Dow up and down hundreds of points in recent weeks – traders of derivatives buying or selling in the days leading up to Triple Witching in order to meet their obligations.

Whatever the outcome, by this time next weekend all of the major expiring derivatives will have been settled. Triple Witching will be over. Many stocks will find themselves in new hands upon settlement; and that will set the stage for the stock market in October and the remainder of 2016. It has a lot to do with whether those stocks end up in the strong hands of folks who really wanted to own them or whether they end up in the weak hands of options traders who just wanted to get a quick profit and get out.

At the moment, every trader is working for the weekend.

The preceding is a post by Christopher Ebert, author of the popular option trading book “Show Me Your Options!” Chris uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. Questions about constructing a specific option trade, or option trading in general, may be entered in the comment section below, or emailed to OptionScientist@zentrader.ca

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By Chris Ebert

You’re special!

It’s a hackneyed line spelled out in many a late-night club.

But, for many traders, especially new traders, the idea that their stock is special can seem alluring. Corporate Earnings reports and other economic data and news can enhance a trader’s sense that their particular stock pick is special – perhaps immune to macro market forces – and thus prone to big gains, even if that specific sector or the market as a whole is struggling.

My stock pick is somehow special! (or so the trader surmises).

In reality, traders are fed data that is intended to lure them into the illusion that they are picking something special. Obviously, there will be times when such an illusion pays off with big profits; statistically some stocks will undergo huge gains, and a trader who happens to own one of them could win big merely by chance. However, in the long run the illusion is nothing more than that.

Traders can certainly profit when they recognize an illusion. Technical traders are adept at recognizing such illusions, and they can profit from the folly of Fundamentalists.  Likewise, fundamental traders can profit when they see a technical chart that appears to be an illusion relative to corporate fundamentals.

Companies often tout that they have the best employees, the most educated workforce, the cutting-edge technology. In the end, it’s all advertising.

Illusion is the key; and it is dangerous to discount the lengths that anyone, be it corporations, stockholders or others, would go through to promote an illusion for profit’s sake. It happens with stocks. It even happens with cities, as shown in the following examples.

Is Nashville, Tennessee more special than Rochester, New York, for example? Is $AMZN more special than $AAPL? It all depends on the advertising. It’s up to traders to know when they are being intentionally fed data, perhaps with an ulterior motive, and when they are simply receiving unbiased data. The inability to distinguish between the two can lead to disappointment, losses… and in the worst case, total destruction for a trader. But, make no mistake – those who intend to alter perception of the data can make a cold distant outpost such as Rochester seem as alluring as a much more temperate city such as Nashville.

As each video clearly states: Makes no difference where I go. You’re the best hometown I know.” Obviously Nashville and Rochester can’t both be the best hometown (their climates are practically polar opposites). Yet that same line has been used in countless other cities around the world. Whether picking a stock or a hometown, don’t fall for that line! It’s only appropriate in a nightclub.

The preceding is a post by Christopher Ebert, Chief Options Strategist at Astrology Traders (which offers subscribers unique stock-trading perspectives and options education) and co-author of the popular option trading book “Show Me Your Options!” Chris uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. Questions about constructing a specific option trade, or option trading in general, may be entered in the comment section below, or emailed to OptionScientist@zentrader.ca

 

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By Chris Ebert

Ever notice how radio content varies with the frequency?

This may come as surprise to those in the younger generation who are apt to get their music on devices other than old-fashioned radios, but the content indeed varies. In most cities, there are very few Top-40 stations near the 88 Megahertz area. Rather, that range tends to be populated with alternative themes – classical music, religious outreach and the like.

Generally, it really isn’t until one gets up to approximately the 94 Megahertz range that one encounters popular music – the so-called Top 40 genre. Sure, there are exceptions in some cities; but it’s not the rule. Popularity seems to prefer certain frequencies.

fm-stereo

Popularity among stocks has a similar tendency. There are certain Temperatures in which the S&P 500 tends to broadcast well, and others at which it is ignored by traders.

An S&P 500 Temperature in the 100 to 200 range has typically been a popular place.

Below 100, while attractive to alternative types of traders (buy-the-dippers, short-sellers, derivatives traders, etc.) is not an area where the average individual trader is likely to feel tuned in. Likewise, most individuals are just as ill equipped to tune in when the Temperature tops 200 as they are to tune into a radio signal over 108 Megahertz. The environment when the S&P Temperature is below 100 or above 200 is not typical, and thus not popular for most.

There are very few radio stations that can advertise that they are at the top of the charts broadcasting at 88 or 108 Megahertz; but there are countless ones broadcasting a few Megahetrz either side of 100.

There’s a reason for that. Popularity!

An S&P 500 Temperature in the 100 to 200 range is like a close friend – it’s familiar… rational… comforting. Anything outside that range is likely to be appealing only to those who prefer alternative music. At the moment it seems the only ones who are likely tuned in to the stock market are alternative-music fans. Not everyone can ride out a 400-point daily drop in the Dow (like the one that occurred last Friday) followed by a 300-point gain (like the one that occurred the next Monday). But some folks love that kind of thing. Others just turn off the radio.

snp-temperature-89

* Option strategies referenced above are analyzed for profit or loss on expiration day only and are opened using an at-the-money strike price, 4-months to expiration, using options traded on a broad-based ETF such as $SPY (NYSEARCA:SPY)

The preceding is a post by Christopher Ebert, Chief Options Strategist at Astrology Traders (which offers subscribers unique stock-trading perspectives and options education) and co-author of the popular option trading book “Show Me Your Options!” Chris uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. Questions about constructing a specific option trade, or option trading in general, may be entered in the comment section below, or emailed to OptionScientist@zentrader.ca

 

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