More books; more futures?

On December 28, 2008, in Investing, by Dave

I’ve been reading a new book “Ahead of the Curve” by Philip D Broughton. This is fun for me because it gets me back into the habit of reading at least 2 books at a time. This allows me to continue with whichever I’m in the mood for when I next start reading.

“Ahead of the Curve” is the story of Broughton’s stint at Harvard Business School. So far so good. I’ll be reading it and Snowball interchangeably for a while.

I’ve been pondering a couple things. I’ve wanted to obtain a Master’s in Financial Engineering and/or Risk Management for a few years now. I’ve been resisting the MBA (not to be confused with the NBA :). Now, at least today, I’m wondering if obtaining an MBA wouldn’t be so bad.

On another note, I almost signed up for an futures account.  The legalese scared me away from completing the application.  I’m interested in having the ability to trade SPY futures.  I’ve spent time exploring the use of options to hedge my exposure to SPY (and, indirectly, VTI) as well as gain income from covered SPY call writing.   The idea of incorporating  futures into the mix is appealing to me.

I am someone who prefers to learn by doing.   Here are some of my concerns…

  1. Hitting the wrong button and entering a futures position I did not want to be in.
  2. Misunderstanding a particular futures commitment (100 shares or 200 shares?).
  3. Being responsible for liabilities in excess of the amount held in the futures account.
  4. Liquidity concerns.  (What is the volume?)
  5. Concern about the unknown unknown.

Thus while I conceptually understand futures, I have gaps in my intuitive and practical understanding of them.  I hope to mitigate these gaps in a couple ways:

  1. Talk with (or exchange email with) folks familiar with futures trading.
  2. Read and research more about futures.  I’ve already started this process.

Until then my present will have no “futures”.

Happy investing!

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2 Responses to More books; more futures?

  1. Matt says:

    I’ll be interested to hear how this goes. What is the minimum investment to “play” with futures? Maybe it would be worth a very small investment to learn by doing?

  2. admin says:

    The lowest cost futures account I’ve found is etrade
    which has a rather steep $10,000 minimum. So far that is the lowest I’ve seen. Many other online investment shops don’t offer futures trading. I’ll keep looking

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