minute, not at all—just that there was an excellent basis historically tosay that it was unlikely to go sharply lower from here, having diddled aroundin the 755–850 area for 4 months. Better still, there was absolutely no newsabout supply increases threatening the market. My cash broker contact actually laughed when I called him to inquire on this point.Darned if CCK didn’t turn right around, too. By March 7, CCK was up at859, and it popped up over 900 at one point during the month. I figured thatthis experimental trade was over. Low prices are always the cure for lowprices, and cocoa seemed as if it might be returning to more usual price levels. The June cocoa puts that I wanted to write were simply not worth writing, at $3 and $9 for the 750 and 800 strikes, respectively. Well, I’d made alittle profit and learned a few things, so it was worthwhile overall.
196
TRADING OPTIONS TO WIN
Not so fast. CCK tanked back down to 796 on March 28 and, while theJune puts still weren’t salable, the July 750s certainly were. I wrote severalof them on the 29th for $21/tonne, with July cocoa (ticker: CCN) closing at826. The May cocoa traded that day in a rather wide 796–833 range, and theMay 750 puts were down to just $5/tonne. The May puts gave up the ghostquietly on the first Friday in April, and now I had two months to sit, andmaybe at some point to try to write some August puts.July cocoa was enormously cooperative, never dipping below 775, buton May 8, September cocoa (ticker: CCU), against which the August optionsoffset, dropped down to 805 and I was able to write the August 750 puts, thistime for $18/tonne. A brick here, a brick there, pretty soon you’ve got ahouse, right? Election season in the Ivory Coast brought some amount ofcivil strife, with 300-odd citizens getting killed, and this event was not abearish factor for cocoa at all. It was, however, a risk factor . . . because Istarted thinking again. If there’s civil strife, I (haha) reasoned, supply can’tpossibly rise and may very well decline. Cocoa trees might be torched, growers might be taken hostage, numerous menaces to normal cocoa supply werepossible. On June 26, with CCU trading at 847, I wrote several September800 (not 750, oops) puts for $26/tonne. There’s a technical term for this action: greed.The August puts expired on July 7, and CCU spent the rest of the monthtrading between 822 and 891. CCU was wandering around 850, and it lookedlike the September puts were going to end up worthless on August 4. Anyway, that’s what it looked like on July 28, with 1 week left until expiration.The next week saw CCU do something it hadn’t done in months, namelydrop 8.6%. On expiration day, CCU opened at 791 and I had to pay $23/tonneto repurchase the 800 puts, breaking almost exactly even on the Septemberwrite.
Was the Ride Worth It?That ended the trade. In theory, I could have continued to ride the bear fora while longer, but that stiff drop was unnerving and I decided that an extradose of caution was in order. As trades go, this wasn’t a bad result at all.The February, May, July, and August puts all expired worthless. I lost mostof the commissions on the March write and a few pennies in fees on the—frankly dumb—September write. All this netted out to about $910 profit permonth over the six trades (a precise per trade figure isn’t available becauseI didn’t write the same number of options every month). The ROC of thewhole mess turned out to be (notionally) 53.1% on an annualized basis.The actual figure was probably a bit better, because cocoa had spent a goodportion of the term of the trade well away from the striking prices of the
Hi-Yo, Yogi!
197
puts I’d written. Hardly spectacular, but acceptable enough for a trade inwhich I’d bungled a couple of times along the way.
How Can the Market Beat Us? Never SayNever, but . . .Once we’ve selected a disciplined entry point and begun riding the bear, theonly threats to our profitability are human error or a new spike low in themarket. Given our preconditions, there is only one generic occurrence thatmight generate enough selling to produce such a spike. Such occurrencesare historically extremely unlikely, and probably would consist of some legitimate scientific research emerging (as opposed to some ridiculous headline in the tabloid press) that indicates that demand for this market’sproduct may or will be sharply lower in the future. In a foodstuffs market,this might be represented by an article in a respected publication, the Journal of the American Medical Association perhaps, that indicates the existence of a severe health hazard to consumers of our market’s product.Now, Homo sapiens have been eating the products of all the tradableedible agricultural markets for millennia, and while this possibility exists,especially given the unfortunate prosperity and ubiquity of the less thanhonest health-scare industry, it’s exceptionally remote. Another such possibility would be the discovery of a useful alternate fuel for automobilesand—necessary condition—the announcement of plans to create the distribution infrastructure required to make this new fuel available to the massmarket.In either of these cases, whether the research ultimately pans out or not,just the announcement of it would likely send our market crashing lower,and we’d be in hell’s own trouble. However, this outcome as described seemsto me to be quite impossible. Why? Are we to believe that a legitimate pieceof complex research such as just postulated will have no effect at all on theprice of our market prior to its public announcement? Fiddle-dee-dee. Objective and independently duplicable research is practically impossible tohide in large, widely traded markets, particularly in regard to its putative future result. Some number of people will have or gain access to it and someof these folks will talk about it for any of a wide variety of reasons. (OK, OK,all you conspiracy theorists out there, I’ll exclude all the folks in the subbasement levels of Area 51.) Think it through. The market in which we mightotherwise have been riding the bear, we won’t actually be trading in—or, atleast, not riding the bear in—because a rumor-driven market does not evermeet our entry qualifications, particularly the non-spike condition.
198
TRADING OPTIONS TO WIN
Let’s Just Not Beat OurselvesThe second danger, much more likely, is that we will err seriously in deciding when to begin riding the bear. In the ideal case, we’ll have been observing an extended bear market, one that’s making or sneaking down towardmulti-decade low prices, and we’ll have an obvious trigger event in hand.These conditions aren’t at all impossible to meet simultaneously; the cocoamarket in 1999–2000 was a textbook case. They just don’t all occur togetherfrequently.If, immediately or very soon after we enter the trade, we find out thatwe’ve goofed in selecting the entry point, we’ll run for the exit. The indicatorof our error will be a new spike low, perhaps a 4–5% or larger drop in a single day, and there’s unfortunately no good way to combat or defend againstthis. If, however, the put options only have a week or less to live, we mighthave a defense. We’ll have to review the supply/demand situation in our market again, to make as certain as possible that we haven’t overlooked an important development in the market. We’ll definitely want to consult ourvarious informed sources (you are compiling a list of your sources and potential sources now, I hope), and learn whether today’s sizeable drop was aone-off event and unlikely to recur . . . or something more serious.Please permit a small digression here. A two-pronged approach is bestin trying to evaluate the new market situation after a sharp dip. If possible,call a cash market broker for the supply/demand part of the question. Theseguys’ living literally depends on their keeping abreast of the latest supply/demand developments in their market, and they’re our first, best resourcewithout question. This is completely reasonable if you consider the matter.Nestlé, Hershey’s, Cadbury’s, E. D. & F. Man and their cash market colleagues should know functionally everything going on in the cocoa market,shouldn’t they?Suppose that your cash market source says that there haven’t been anydevelopments, now what? Now we turn our attention to the exchange, incocoa’s case either NYBOT or LIFFE, and pick the brains of our broker’sfloor people and any other floor sources we’ve been able to acquire. It’s likelyenough that we won’t be able to talk to our floor sources while the market’sopen; they’re probably having quite a wild day themselves. Trying to pullthem off the floor to answer a question is not only rude, it’s a waste of yourtime and theirs. Just leave a polite message asking them to call you backwhen they can (that’s why we have the 800 number, right? We try to put theodds in our favor all the time, in this case the odds that they’ll call us back).Who knows, one of them might have time to call while the market is stillopen. It’s not time wasted waiting for the callbacks, either; we can andshould be using this time to check the newswires, just in case the market-
Hi-Yo, Yogi!
199
moving event has accidentally been discovered by the financial press. Endof digression—now back to solving our problem.If none of our sources can add to our stock of information about whatthe devil is going on in the market, we exit, as quickly as we can. Dancingin the dark is a lot of fun; trading in the dark is a losing proposition all thetime. Contrarily, if our floor sources indicate that, for example, some largetraders got caught badly wrong and had to liquidate their long positions(unluckily for us, of course), we can, courtesy of the short remaining life ofthe puts we wrote, either sit still or roll them out or out-and-down. The majordetermining factor in our decision will be how far, if at all, the market hasmoved into-the-money relative to our puts’ striking price.
Still in Our FavorWe do have what amounts to some built-in insurance when we select ourstarting point for riding the bear. We can to a degree ignore the actual pricemovement of the front month contract if the other preconditions have beenfully met. If a trigger event has occurred—voluntary crop destruction orabandonment on a large scale, the shutting in of oil or gas wells, any actionthat patently restricts immediate or reduces future supply—we’re right nearthe short-term minimum value of that market. We no longer need to watchfor the “extended bear market” condition, because this condition will be ineffect. If the bear market, given the conditions just named, is only of 3months’ duration to date when the trigger event occurs, the precondition oflasting 4 months or more has become irrelevant. The occurrence of a triggerevent overrides the duration condition in the real world, and if the otherpreconditions are in line, we can merrily discard it and proceed with thetrade.
The Ordinary Case—The Bear Nibbles OnWhen we’re disciplined about selecting our starting point for riding thebear, it’s entirely typical to see the market move somewhat lower over thefirst month, possibly below the strike of the our short puts. We’ve writtenthe nearest strike puts and it is a bear market after all, and this is hardly anoutrageous result. While we prefer not to see such a drop, such an event represents only an annoyance as opposed to a threat to our capital. If we entered the trade on a disciplined basis and cannot find any reason to believean increase of supply is on its way, we’ll sit very still, particularly if there arejust a few days remaining in the life of the options we wrote.
200
TRADING OPTIONS TO WIN
We don’t necessarily expect a bounce in the market, but what we do expect, given our entry conditions, is that further declines in our market willbe both slow and small, if they occur at all, especially in our favorite caseof the market being at or near long-time lows. We have another tasty littleadvantage here, too, courtesy of nothing less than the very nature of futuresmarkets. As long as our dollar risk remains small and no new supply/demand factor appears, we actually don’t care if our short puts go slightlyinto-the-money.Fairly interesting, yes? Why don’t we care? We took stock of the relative advantages futures markets offer us, compared to other broad markets,in Chapter 2. These weren’t by any means all the advantages. In stock markets, if we write put options and they go into-the-money with weeks left untilexpiration, the owner of the options may decide to exercise his options early,that is, two or three weeks or more before the options expire. On exercisinghis option, he sells his shares, we put writers will have to pay for them, andhe can earn interest on the dollars we pay him. As I write this, U.S. shortterm interest rates are risibly low, and the put owner won’t be terribly anxious to exercise early, but short-term interest rates won’t be low forever,and the put owner will enthusiastically resume parking our dollars in hisinterest-bearing instruments when rates do rise.In futures markets, put writers have no such hazard, for early exercisesimply doesn’t occur, barring the case where the put owner is an outrightbozo. When an option is exercised, put or call, all that happens is that thewriter is assigned a position in a futures contract. The option owner receivesno dollars whatever; indeed, by exercising early, he cleverly costs himselfat least one more commission per contract. He has exactly zero incentive toexercise his in-the-money options until the very end of the options’ life.
Another Sandwich Out of the Picnic BasketAll right, the bear has kept nibbling on the market price, and the puts we’vewritten have just a couple of days to live. What’s our next move? There areseveral cases to check. If the options we’ve written are still a little bit OOM,I prefer to wait and try to give them a chance to expire worthless. If theyappear to be expiring worthless, for example if cocoa is 11 dollars aboveour striking price with 90 minutes left to trade on expiration day, we shouldproceed with writing the next month’s puts. Sure, there’s a bit of risk indoing this, the market could tank 20 dollars or more in the last hour, but weonce again are trying to give ourselves the long end of the odds.If, instead, we would wait until the Monday after expiration (NYBOTcocoa options expire on a Friday, or on the day before if Friday is a holiday)to write the next month’s puts, we might have a problem. Unless the market
Hi-Yo, Yogi!
201
opens lower on Monday, we’ll be very apt to find that the premium of theputs we want to write has dropped, sometimes annoyingly far, and theymay no longer be worth our time and effort to write.If the market has moved modestly upward from the date we enteredthe trade into the last week or so of the life of the options, a different actionis warranted. When the exercise of our puts becomes extremely improbable,as in this case, we should accept a modest risk and go ahead and write thenext month’s puts, ending up with a double position for a few days, assuming that the ROC of the next write is satisfactory. Yes, we are vulnerable, ifthe market moves downward and into-the-money, to having to either repurchase the original puts or to roll them out and hold onto a double positionfor a month. If you don’t like even the prospect of having a double-size position, you can alternatively buy back this month’s short puts, ideally for 1tick but probably for more. Other considerations aside, if we want to continue riding the bear, we must figure out how to write puts for the next cycleof the trade.When this modestly rising market occurs instead with two or threeweeks left until option expiration, we’re in a bit of a bind. In extended bearmarkets, all options’ time premiums decrease, in absolute dollar terms,sooner or later. Our dilemma is this: if we wait until the expiration of our current puts, the time premium on the next month’s puts is likely to be so lowthat we don’t want to bother writing them. If, contrarily, if we would takepreemptive action, by writing the next month’s puts while still holding ourshort position in the front month puts, we may be inviting trouble. The longertime frame, even as little as a week or 10 days longer, changes our risk/reward picture, and the risk here is—what else?—capacity risk. If we havesufficient capital and cushion to support the larger position, that’s fine. Ifwe don’t, or it’s close, we’ll be creating for ourselves what amounts to a Martingale, an ancient and unsound “system” involving doubling or tripling one’sstake after a losing wager. This tactic of “doubling-up” has been notoriousthroughout history, having caught in its snares Dostoyevsky and Casanovaamong thousands of others, and we don’t want any part of it.Well, it’s not enough, it’s never enough to merely complain about adilemma. What tactic do we employ when this situation arises? Easy. Weask ourselves this question, “Which path is riskier, overall?” and all of a sudden we don’t have a dilemma any longer. We never have to enter a trade,right? You bet it’s right, and as far as I’m concerned it’s an absolute. If wecan’t write the next month’s puts conveniently, and for the level of premiumwe want, we’ll let our current short puts expire, bank the profit, and quit riding the bear for a while. A favorable market movement may restore our opportunity to resume our ride, but here’s another of my trading axioms: don’tforce a trade (as I did when writing the September 2000 800 cocoa puts inthe earlier example). Just like our insistence on entering a trade at our price,
202
TRADING OPTIONS TO WIN
we should relentlessly insist that any continuation of a trade must conformto our specifications. If it doesn’t, we’ll find something else to trade.
Troublesome CasesWhen our short puts have moved into-the-money with only a few days leftin their lives, we’ll simply roll them out, preferably out-and-down but possibly just out, to the next or the second month away. At least, that’s whatwe’ll intend to do. We might well run into the same difficulty previously described in the case of our puts expiring worthless. If there isn’t enough premium available to us in the prices of options into which we might roll, we’lljust buy back the written puts, put this trade into the history books, andlook around for another opportunity.There’s one more case to examine, and it’s our least favorite . . . whichmakes it the most important, because the principal portion of our task inwriting options is to control risk at those times it rears its head. What do wedo if the market moves more than a few ticks into-the-money? As discussedpreviously, given the entry conditions for this strategy, this result will obtainevery so often, and we must consider it. The answer, or at least my answer,to the question of what to do is, “It depends on how the market has moved.”If the market dives right through our striking price within a few days ora week of entering the trade, or of any cycle of the trade, then we must admitwe have erred and exit the trade ASAP. In contrast, if there’s only a weekor less remaining in the life of our short puts when the market dives downinto-the-money, we might have an opportunity to roll out, or flip out, or outand-down or out-and-up. Equally, after such an undesirable movement, wemight very well not want to continue the trade. Our decision to continue onor not will hinge on the cause of this sharp drop in price.We’ll be more likely to see the other type of decline, a gradual but persistent move downward through the strike of our short puts. This is a signthat we were a little early when we selected our entry point or that a supply factor has changed during our trade, and this will happen to us occasionally. Fortunately, as long as we’re prudent, this sort of market movementtends to be much more a nuisance than a problem.Suppose we’ve written, in cocoa, some month’s 750 puts for $20/tonnewith five weeks until expiration. The market is at 785 tonight, but over twoweeks it works downward to 754, and in the third week down to 728. I won’ttry to speak for you, but that’s plenty far enough in-the-money for me. Speaking as a professional coward, 740 is probably the price at which I wouldhave tried to take some action. The puts, let’s say, have settled at 31 tonight.We can sit still, exit the trade, or roll out. Which do we prefer, and why?Exiting the trade is an option, but I don’t much like it in this situation.We’ll lose 11 ticks at least, probably more like 14 or 15 after we wrestle with
Hi-Yo, Yogi!
203
the bid-ask spread again, and of course two commissions per contract. That’san acceptably small loss, and by exiting the trade we’d obviously dispose ofany further trading risk, but this action would be premature. We wouldn’tbe giving ourselves the chance to emerge with a profit. In this spot, I’m muchmore inclined to roll out, if not for one month then for two, repurchase the750 puts and write the 700s if possible. Clearly, this decision will be contingent on a satisfactory level of time premium in the options I’d roll into,but if the premium is adequate, then I want that opportunity to profit.Please note that, unless some market condition has changed during thethree weeks we’ve been in this hypothetical trade, our relative risk in extending the trade by rolling out is really quite low if we properly observed thetrading preconditions of this strategy. We’re not bottom-picking when weride the bear. We don’t much care if the market continues lower, as long asit doesn’t do so suddenly, because ultimately we will book a profit, or perhaps several profits. And, of course, the history of physical futures marketsindicates very strongly that this feared sudden large downward thrust neveractually does materialize.
Models, Margins, and Red FlagsYou’ve probably observed that I haven’t said a word about some topics thatare usually quite important when discussing strategies and their application.Aren’t we going to look at the data we can acquire from our pricing model?This time, we’re not. When we’re riding the bear, the model doesn’t tell usvery much about our risk or our potential for success. And, what about margin considerations and other factors?The reason our model isn’t too helpful here is straightforward. Themodel is derived, ultimately, from the theory that a market’s next n tickstend to be random, lognormally distributed, when n is large enough. It dealsin terms of the probability of the future distribution of prices, with otherthings being equal or held constant. When we ride the bear, other thingsaren’t equal in the first place, and we distinctly do not expect normal distribution of prices in future; in fact, we anticipate a very non-lognormal outcome.The underlying hypothesis of the strategy is that approximately 40–45% of theprices represented along the lognormal curve will simply not be seen in thenear term. We believe we have a strong historical advantage due to a market’srecent price activity, and we think we have a good idea about future pricedistribution . . . and our picture of it doesn’t look anything like the model’sprice distribution curve.In one sense, riding the bear resembles certain technical methods. Wetake action X because of price movement Y having occurred in the market,
204
TRADING OPTIONS TO WIN
and looking for future market movement Z, which is in essence what technically oriented traders do. The comparison isn’t exact, though, becausewe’re again anticipating where a market is not likely to go, just as in thenon-seasonal strategy, whereas the usual approach of the technician is tothink more like most traders, that is, where a market is likely to go.What about our capital considerations? The SPAN margin requirementsare derived from the lognormal model, no matter what any market may bedoing at any given time. This fact works in our favor. First, we’re in a longishterm bear market and, when the price declines, the gross value of the futures contract obviously does too. SPAN uses gross contract value as oneof its parameters, and our margin requirement from this component of theSPAN formulae will as a rule be declining moderately, in harmony with themarket decline. This lessening of margin requirement will persist until orunless our market moves substantially into-the-money with regard to the options we’ve written.Next, our market’s volatility may have been doing many things whilewe’ve been riding the bear, but it almost surely hasn’t gone up more than apoint or two, and it surely hasn’t gone well higher. Cocoa’s SV, virtuallythroughout the trade we’ve discussed in this chapter, stayed within a veryfew points of its 6-month lows. SPAN uses market volatility in its calculations, too, and we won’t be seeing any sharp margin increases from thiscomponent of the SPAN equations.In short, unlike in other strategies, we don’t have reason to worry aboutsevere changes in our margin requirement. This relative freedom from worryallows us a good bit of latitude when we set up our amount of cushion. Whenriding the bear, I’ve been very comfortable over several trades by using afigure of 2 times the SPAN requirement. If you’re not comfortable with thislevel of cushion, feel free to increase it proportionally, but when you watchhow a ride-the-bear trade proceeds, you’ll quickly see that there’s little orno cause to be overgenerous in the amount of cushion you use (again, verymuch unlike many other strategies).If the major potential threat to our capital in this strategy is a sharpspike lower, do we have any way to establish a sort of early-warning system?We do, and it’s easy to use, but it’s not exactly foolproof. What is usually theproximate cause of a large and sudden downward move in any market? Theemergence of lots of selling, right? If we just monitor the daily volume of ourmarket, we’ll be able to tell very easily if the activity level in the market isrising. If volume and the open interest both rise, more or less steadily, overa couple of weeks, and we also observe the market steadily moving lower,these circumstances probably constitute a red flag that it’s a little early tostart riding the bear.If someone has a whole lot of something to sell, he is not ordinarily likelyto stand on a chair and yell out “Hey, I’ve got a lot of stuff to sell!” He’ll try to
Hi-Yo, Yogi!
205
dispose of his goods as smoothly as he can, in an effort to try not to disturbthe market price too much. In large, liquid markets, the market can absorbamazing amounts of buying and selling, many times with only tiny movements in price. Our large seller won’t need to be cagey in such a market. Hecan usually offer what he has or stand around and pick off bids until he’sfinished.This is definitely not the case in smaller, less liquid markets, and we mustbe careful here. Cocoa, per our example, is not a large market as physical futures markets go. Often enough, a truly large seller will require a full dayor two, perhaps up to a week or so, in order to complete his sale in one ofthese markets, assuming he is concerned with not knocking the marketprice markedly lower. This is the type of situation that our monitoring ofvolume and open interest can discover.If the open interest in our market would be falling, our hypotheticallarge seller would clearly be liquidating a long position, and we can sit still,because he’ll shortly be running out of goods to sell. When open interest isrising, he represents new selling. We may decide that this situation imputesa little more downside risk than we’re willing to tolerate, and either not enterthe trade or give the bear’s back a rest by exiting our existing trade. Whatwe can’t detect in advance is a huge wave of selling, for instance a group offunds entering the market on the short side. How likely is this latter occurrence at or near the bottom of our presumably long-term and nearly soldout bear market?If the market’s price is somewhere within its normal historical range,this sort of price movement is possible and has occurred once in a while, the1997 CBOT corn market being one example. However, when a market isflirting with long-time absolute lows, as was the situation in the cocoa example we’ve seen throughout this chapter, such waves of selling simply don’tmaterialize. Who will be the sellers? Not producers—if we have a triggerevent in hand, they’re leaving or have already left the market. Commercialusers? Hey, they’re absolutely delighted. They’re locking in future production costs very profitably by buying each dip in the market. Commodityfunds? Nope, not them either. They’re required (well, if they want to survive,at least) to produce profitable results for their clients, and they fully understand that selling cocoa at $700 per tonne, or coffee at 42.00 cents per pound,or oats for $1.02 per bushel aren’t exactly wonderful ways to generate much,or any, profit.When a bear market emerges in physical futures, and when it persistsfor several months, let’s keep a sharp eye and an open mind. When there’sjust too much supply in a market, let’s be patient and wait for the selling todry up. Then, we’ll ride the bear to our profit over a couple or several months,and we’ll be quite pleased to be in a very low risk, low margin, high expectation, and high ROC trade, and with enormous flexibility on our side, too.
206
TRADING OPTIONS TO WIN
Perhaps it’s more fun riding horses, or camels, or maybe even giraffes—Iwouldn’t know about that—but it’s far more profitable to ride the bear whenwe have the chance.So far, we’ve had a look at three strategies that don’t depend on the existence of either bull or bear markets. Non-seasonals occur in both, and inneutral markets, too. Strangles? Well, we certainly prefer to apply them inmarkets that will remain neutral for a time. Straddles are approximately theinverse of strangles, applied to take advantage of rising option IVs and possibly also a sizeable market move.Riding the bear, of course, depends on the pre-existence of a bear market, and I can hear you getting restless if you happen to be the most common species of trader—a bull. Something about human nature seems to justnaturally love a bull market. “C’mon, haven’t you got any strategies that wecan use in bull markets?”You bet I do. They’re my favorite kind of markets, too . . . or, at least,the middle and the end of them are. However, I hate the whipsaw risk thesemarkets typically pose. Trying to establish and maintain a straight long position in a bull market can be enormously frustrating, not to mention costly.Why not instead establish a position that will profit if the market moveshigher, and when it doesn’t?How do we go about doing this? Turn the page.
CHAPTER 11
The King ofStrategiesThe Martian Ratio-Spread
Spread out! . . . (whap!) . . . Spread out some more!—Morris Horwitz (Moe Howard)
nder a few sets of conditions, the WOOM call options in a market canbecome startlingly well bid, insanely bid to all intents. Huge bull markets will frequently have this effect on prices, as will some impendingmarket-moving events like certain