AL Circle Blog

In the previous blog, we explored the LME’s primary function, i.e., price discovery. Today, we shift our focus to its second essential role, hedging. The LME isn’t merely a platform for observing metal prices, it empowers participants to actively manage price risks through strategic trading. Hedging involves establishing long or short positions using futures and […]

The London Metal Exchange (LME), established 147 years ago, stands as a cornerstone in the global metals market. Its longevity and reputation have cemented its status as a trusted institution for price discovery and risk management. Price discovery is the process through which market prices are determined by the interactions of supply and demand. At […]

In the world of aluminium trading, understanding your strategic choices as a speculator is crucial. One of the key tools available to traders is the put option, a financial instrument that offers the right to sell, but not the obligation. In this blog of “Hedging with Jorge,” we delve into the fundamental dynamics of a […]

In previous blogs of Hedging with Jorge, we explored how put options function for investors and speculators. Now, it’s time to look at how these same tools can support hedgers, those who aim to protect value rather than speculate on market movement. Let’s start with the basics, like why would a hedger buy a put? […]

Introduction When navigating the aluminium market, hedging strategies play a crucial role in risk management. Two common methods used by traders and speculators are selling futures and buying put options. While both techniques are employed to benefit from a declining market, they function differently and carry distinct risk profiles. Let’s break it down. Selling futures […]

Introduction In the world of metals trading, particularly in aluminium, hedging strategies play a crucial role in risk management. One such approach involves using put options. But what exactly is a put option, and how does it compare to selling futures? In this episode of Hedging with Jorge, we dive deep into the mechanics of […]

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 […]