AL Circle Blog

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. […]

Credit lines play a crucial role in managing risk and ensuring smooth transactions in trading. In this episode, we explore the complexities of credit lines and compare their use in over-the-counter (OTC) trading to the London Metal Exchange (LME) clear. Why Do You Need Two Credit Lines? In metals trading, two types of credit lines […]

Navigating the London Metal Exchange (LME) can be complex, especially when it comes to financing your trades. In this episode, we dive deep into credit lines, how they function, and why they are essential for effective trading. The Role of Brokers in Credit Lines A broker plays a crucial role in facilitating your LME transactions. […]

Previously, we introduced the concept of initial margin—the amount you deposit before entering a trade. In this blog, we take things further with variation margin and its impact on your trading positions. What is the Variation Margin? Once you place a trade, the market price fluctuates throughout the day. Let’s break this down with an […]

As we dive into another episode, let’s continue our discussion of futures trading – Initial Margin. Understanding margins is crucial for managing risk effectively, whether you’re trading long or short. Let’s break it down. What is the Initial Margin? When you enter a futures position whether buying (long) or selling (short) you must guarantee that […]