RISK DISCLOSURE STATEMENT
THE RISK OF LOSS IN TRADING COMMODITY FUTURES CONTRACTS CAN BE SUBSTANTIAL. YOU
SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU
IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD BE AWARE OF
THE FOLLOWING POINTS:
1. You may sustain a total loss of the funds that you deposit with your broker to establish or
maintain a position in the commodity futures market, and you may incur losses beyond these amounts. If the
market moves against your position, you may be called upon by your broker to deposit a substantial amount of
additional margin funds, on short notice, in order to maintain your position. If you do not provide the required
funds within the time required by your broker, your position may be liquidated at a loss, and you will be liable
for any resulting deficit in your account.
2. Under certain market conditions, you may find it difficult or impossible to liquidate a position.
This can occur, for example, when the market reaches a daily price fluctuation limit ("limit move'').
3. Placing contingent orders, such as "stop-loss'' or "stop-limit'' orders, will not necessarily limit
your losses to the intended amounts, since market conditions on the exchange where the order is placed may
make it impossible to execute such orders.
4. All futures positions involve risk, and a "spread'' position may not be less risky than an
outright "long'' or "short'' position.
5. The high degree of leverage (gearing) that is often obtainable in futures trading because of the
small margin requirements can work against you as well as for you. Leverage (gearing) can lead to large losses
as well as gains.
6. You should consult your broker concerning the nature of the protections available to safeguard
funds or property deposited for your account.
ALL OF THE POINTS NOTED ABOVE APPLY TO ALL FUTURES TRADING WHETHER FOREIGN OR
DOMESTIC. IN ADDITION, IF YOU ARE CONTEMPLATING TRADING FOREIGN FUTURES OR OPTIONS
CONTRACTS, YOU SHOULD BE AWARE OF THE FOLLOWING ADDITIONAL RISKS:
7. Foreign futures transactions involve executing and clearing trades on a foreign exchange. This
is the case even if the foreign exchange is formally "linked'' to a domestic exchange, whereby a trade executed
on one exchange liquidates or establishes a position on the other exchange. No domestic organization regulates
the activities of a foreign exchange, including the execution, delivery, and clearing of transactions on such an
exchange, and no domestic regulator has the power to compel enforcement of the rules of the foreign exchange
or the laws of the foreign country. Moreover, such laws or regulations will vary depending on the foreign country
in which the transaction occurs. For these reasons, customers who trade on foreign exchanges may not be
afforded certain of the protections which apply to domestic transactions, including the right to use domestic
alternative dispute resolution procedures. In particular, funds received from customers to margin foreign
futures transactions may not be provided the same protections as funds received to margin futures transactions
on domestic exchanges. Before you trade, you should familiarize yourself with the foreign rules which will apply
to your particular transaction.
8. Finally, you should be aware that the price of any foreign futures or option contract and,
therefore, the potential profit and loss resulting therefrom, may be affected by any fluctuation in the foreign
exchange rate between the time the order is placed and the foreign futures contract is liquidated or the foreign
option contract is liquidated or exercised.
THIS BRIEF STATEMENT CANNOT, OF COURSE, DISCLOSE ALL THE RISKS AND OTHER ASPECTS OF THE COMMODITY MARKETS. In light of the risks, you should undertake such transactions only if you understand the nature of the contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk. Trading in futures and options is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.
Futures-Option-Trading.com
1: Futures option trading basics
2: How to price futures options
3: Understanding the Greeks
4: Using option spreads
5: Synthetic options and futures
6: Strategies
7: Risk Disclosures for options
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