AL Circle Blog

When it comes to protecting aluminium consumers from price volatility, call options are a commonly used tool. But the reasoning behind buying a call option as a hedge is often misunderstood. In this episode of Hedging with Jorge, we break down how and why aluminium consumers use call options to safeguard against price hikes. Buying […]

Welcome to another blog of Hedging with Jorge, where we continue to simplify complex market concepts into simple, practical explanations. We will explore the world of call options, a tool that offers flexibility and protection in uncertain markets. A call option is essentially the right to buy an asset at a predetermined price, the strike […]

In this blog, we delve into the strategic considerations a speculator must weigh when choosing between a call option and a futures contract. Using a practical example, we’d like to explain the nuances of each approach. Scenario Overview Imagine you’re a speculator eyeing a long position in the market. You have two primary instruments at […]

Today, we’re diving into call options, what they are, how they work and the factors influencing whether you should exercise them. Let’s break it down using a simple example from the aluminium market. A call option is a right to buy a commodity (in this case, aluminium) at a specified price (known as the strike […]

Introduction Our previous discussion explored the fundamentals of call options and how they grant you the right (but not the obligation) to buy aluminium at a predetermined price. Now, let’s dive deeper into decision-making: When should you exercise a call option, and when is it better to abandon it? Options are vital tools in hedging […]

Introduction Understanding financial instruments like options and futures is crucial for risk management in commodity trading. In this episode of Hedging with Jorge, we explore the fundamental differences between call options and futures, particularly in aluminium trading. What is a call option? A call option gives the holder the right, but not the obligation, to […]

When discussing futures contracts, we often focus on outright buying and selling. But what if, instead of purchasing the commodity directly, you had the right rather than the obligation to buy it? That’s where options come into play, offering flexibility in trading strategies. A call option gives the holder the right to buy a commodity […]

Introduction When analysing the world of options trading, it’s crucial to approach it from a speculator’s mindset. Unlike hedging, which focuses on risk management, speculation is taking positions based on market expectations. To put it simply: This approach is fundamental to trading futures and options on the London Metal Exchange (LME), particularly in aluminium markets. […]

In the intricate world of trading, the relationship between a client and their broker plays a pivotal role in determining both the quality of service received and the associated costs. Understanding the concept of “impact”, the degree to which a client’s demands affect a broker’s resources is essential for traders aiming to optimise their strategies […]

Brokers play a fundamental role in accessing the London Metal Exchange (LME), as the key intermediaries between traders and the market. In this episode, we discuss broker categories, their responsibilities, and the costs associated with their services. The Broker’s Role in LME Trading To access LME markets, traders must open an account with a broker. […]