10/25/11

FUTURES TRADING theory Series 3 Exam -TIPS- Commodity Broker -

Series 3 - Some tips - By Milton Laene Araujo

INTRODUCTION

This manual is intended to prepare you to pass the NASD Series 3 exam, which will allow you to be registered as an Associated Person AP, or Registered Commodity Representative, RCR, with any firm dealing in the trade of Futures and/or options on Futures contracts.

If you choose to memorize questions and answers prior to taking the exam, it will most probably result in failure.

It is important that certain concepts be learned, and applied in each exercise.

You must therefore decide to put forth 4 and ½ hours per day, with an honest effort, if you are to successfully pass your exam.

My goal is that you learn this material. I will teach you a few “tricks”, for easy interpretation of the problems.

Remember – This is an exam, not the real world. So, the information you are about to receive can be very deceiving. A question will appear with extra data to get you confused. The exam is extremely difficult! It will test how well you have prepared yourself for the task.

If you have investment experience, and begin to doubt the information presented in this manual, do not take it for granted. You need to know that many concepts differ between commodity trading and stock trading, including the commodity options.

You will be successful on your first exam attempt if you follow the LIGHTS FOR PASSING, which I will present to you as we move along.

At first, I am covering the MATH of the matter.

Then, we will add some theoretical relevancies to help you understand which LIGHT apply to each MATH problem. Finally, we will cover everything else.

I will be communicating with you during the entire process.

Let’s move on the next page to situate ourselves with the INDEX.

INDEX

CHAPTER 1

1- Speculating FUTURES

1.1- Markets knowledge Applied – Long and Short, cash and cash forward contracts.

1.2 - Speculation Problems. How to solve them?

1.3 - Speculating with Financial Contracts

1.4 - Contract Pricing

1.5 - Speculating FUTURES with Margin - Problems

CHAPTER 2

2- Hedging FUTURES –

2.1 – Basic Hedging problems and how to approach

2.2 - Basis calculation Problems

2.3 - Hedging commodity futures – Chapter 4

2.4 - Hedging Financial and Monetary Futures – Chapter 5

Hedging Financial Contracts FUTURES – Problems

CHAPTER 3

Interest Rate FUTURES – Problems

Stock Index FUTURES – Problems

Foreign Currency FUTURES – Problems

CHAPTER 3

Options ON FUTURES – Problems

CHAPTER 4

Technical and Fundamental Analysis

CHAPTER 5

An overview of everything we learned so far!

CHAPTER 6

Everything else

CHAPTER 1 SPECULATION ON FUTURES –

1.1 Markets Knowledge Applied

Speculators try to forecast price changes and take positions based on their forecast. They are people like you and me, who can make money if they forecast correctly the direction of the price of any commodity, or lose money when they are wrong. Their role is to add liquidity, and not to forecast prices.

Speculators have no interest in owning the physical commodity, so they offset their futures position before delivery.

Speculators increase liquidity in the futures market. Liquidity here is money, which enable the market to operate more efficiently.

The more speculators, the more liquidity we see in the market, therefore Market Liquidity is found by increasing the number of traders.

Increasing trading volume allows large trades to be executed without dramatically affecting prices. When I say large trades, I mean large orders.

If we have only few speculators, and a large trade is executed, it can change the price of the commodity faster than when we have more speculators. For every contract traded by hedgers (Participants that usually take or make delivery of a commodity), there may be 30 or more contracts traded by speculators. Increasing trading volume allows large trades to be executed without dramatically affecting prices. When I say large trades, I mean large orders.

A Thin Market is usually more risky, for it is illiquid. Not much money changing hands. It is thin because it doesn’t have enough participants. So prices can be volatile. It can go up or down inconsistently. So, the greater the volatility in the market, the greater the markets risk.

Now, if we have a market with many participants, we have a market with increased liquidity, and it improves market efficiency. (((time to leave a comment to the author. )))

This being said, I prefer cover speculation problems by giving you better information about futures contracts and how they work.

Basic Market Information –

I want to start with the CASH markets. There are two types of them. The first is the market we are familiar with. For instance when you purchase gold in a local store, the dealer will look at the current “going” price for gold, then add his “mark-up” to arrive to a retail CASH or spot price, which you must pay. A farmer would sell his product and receive the “going” or “cash” price, is another example.

The second type of cash market is known as the “cash forward” or to “arrive” market.

A cash forward contract is negotiated between buyer and seller, one-on-one, for a specific product, at an agreed upon price, and for a future delivery.

The difference between Cash forward contracts and futures contracts is that the buyer and seller do not meet. Instead, the transaction takes place in a trading floor of the commodity exchange. There are over 87 commodities, and they are traded in different market exchanges. The commodities are traded in an auction market. The futures contracts are legally binding. The main advantage of futures contracts is that it allows speculators to participate, bringing therefore, liquidity. It is standardized, with a set quantity, quality etc. This ability to speculate and hedge in the futures contracts help to keep prices lower. The futures market provides price forwarding because its liquidity. We are talking about price forwarding here… do not get confused with cash forward mentioned before.

Imagine a farmer who has not yet harvested his crop, but has already negotiated with the buyer of the crop to deliver his crop in three months at a set price. This farmer has negotiated a “cash forward” contract in order to assume himself of a price. The cash forward contract brings stability in the cash market. This contract is illiquid, and referred to as not efficient.

Now that we know what is “cash market”, we can then move on to FUTURES MARKETS.

A futures contract is a promise to make delivery (if short) or take delivery (if long) of a set quantity of product, with a set quality, at a set price, in a set time period.

Long – One who buys or holds the contract.

Short – One who sells or issues the contract.

SHORT AND LONG A FUTURE CONTRACT

Let’s first examine the long position.

Long the market – The owner of the Futures contract holds the contract with a price tag that is written in his contract. When he purchases the contract he goes long the market. He is the new owner of the contract. He wishes the market price (the “going” price) of that commodity to move up, higher than the price written in his contract, so he can sell for the current market value, (CMV), and keep the profit.

Picture this scenery:

Today is September 1^st, and you (as an speculator), have an opinion that the price of Crude oil is going to move higher before the month of November. You go long the contract. What actually happened?

LONG 1 NOV CRUDE OIL CONTRACT @ 73

You called to your AP and told him to buy a Nov crude oil contract. The AP phoned the order to the floor of the exchange (the pit). The floor broker filled the order and returned it to the AP for reporting back to you, the client. The futures contract has just been transferred to you. You entered an agreement and backed it with your good faith money and a promise to take delivery. You good faith money is called Initial Margin. It is returned to you after the contract is traded. It ranges around 5% of the full price of the contract.

You are making a promise to do something in the future. You are promising to take delivery of 1000 barrels of oil in November, and pay $73 per barrel or $73,000.

Now, assume that by September 25^th the current price of the NOV CRUDE OIL CONTRACT price is at $81 per barrel. You believe this price is a high as it will go, and decide to SELL your contract. If you get $81 on the sale, you are now rid of your agreement with the following results.

Bought a CRUDE OIL contract for $73 per barrel

Sold a CRUDE OIL contract for $81

This is an $8 profit - A gross profit of $8 x 1000 (the size of the crude oil contract)

= $8,000.

You bought (went long) then sold (liquidated) the contract.

- Anytime you go long, you have to get out by going short. And vice-versa.

Now Let’s examine the Short Position:

Short the Markets

On March 5^th you have a hint that the price of sugar has topped out and will probably go down in the coming months. You make your calls and now went short the future contract. You told your AP to sell 1 may contract at 17 cents per pound. (One contract has 112,000 pounds)

SHORT 1 MAY SUGAR@17 ----- sugar is traded in cents per pound

The initial margin money is still placed with the clearinghouse, and a new agreement you have entered into. In this case you promise to make delivery of 112 thousands pounds of sugar sometime in May and receive $17 cents /pound or $19,040 (.17X112000 = 19,040).

Now assume on the 29^th of March the May price of Sugar moves to 14 cents. You decide to buy back a contract for the same quantity, and for the same month in the same clearinghouse, to offset your responsibility and take your profits.

As you see now that you went short, to offset your contract you must go long.

You profited 3 cents per pound.

.03 X 112000 = profiting $ 3360 per contract Gross.

************

When you go short, you promise to deliver something that you do not have, and before expiration you need to buy the same commodity, hoping that the price went bellow your selling contract. Because you went short, now need to buy, or go long to offset your position. Speculators who go short the market are forecasting that the prices of the commodity will decrease.

A hedger, as mentioned before, is a person who is involved in large purchases or sells because he either produces or uses the commodity. He is an active participant of the markets and therefore is said to be less risky.

A Hedger pays less for his initial margin than a speculator. They offer less risk, for they can back up with a merchandize, while a speculator will have to come up with cash to settle his contract. Only 3% of all contracts traded are delivered. The rest is all speculation, or participants trying to forecast what price will go up in the near future, or in the distant future. It is necessary to have the real commodity to be able to create a contract.

1.2 SPECULATION PROBLEMS – How to solve them

Solving problems concerning speculation will involve a basic knowledge of everything we are going to study. Speculation is the calculation of gain or loss of the futures half of a hedge problem. Profits accrue for a long when prices rise, and for a short when price decline. The following LIGHTS will be applied in different type problems.

LIGHT 1- SPECULATION

Always work ONE contract through first, THEN multiply the answer times the number of contract.

In other words, find the profit or loss net and later multiply by the number of contracts.

Example 1:

1- your client is long 2 cocoa contracts, which he purchased for $1,150 per metric ton. Later, the client sells the contract for $1,247 per ton. With Commissions of $65 per round turn (per contract – including buying and selling the contract), and a contract size of 10 metric tons, what is the result of the trade?

SOLUTION:

2 10 metric tons $ 65

___________ ________________ _____________

# Contracts Contract size Commission

$1,247 Sale price per metric ton

$1,150 Purchase price per metric ton

$ 97.00 Per ton Gain (gross)

X 10 Contract size = 10 metric tons

$ 970.00 Profit per contract GROSS

- 65.00 Commission

$ 905.00 Profit per contract NET

X 2 Number of contracts

$1,810.00 Net profit on the trade

LIGHT 2 – SPECULATION

Work every speculation problem as above. Follow the organization pattern presented to you. Write down each step as above, and do not calculate total commissions to subtract. And remember, if you have a profit you must subtract commission. If you have a loss, you must add commission.

Your mistakes in calculating will appear when you use short cuts. We have many things to cover, and it is necessary that you follow this pattern. If you skip this pattern, things will get more complicated later. Remember that when you do speculative problems, you are going to do it with commodities quoted in cents, and financial instruments that use points. It is a lot to remember! Therefore, follow my instructions.

LIGHT 3 – SPECULATION

ANY and ALL commodities quoted in “cents” per unit, (cents per pound, per ounce, per gallon, etc.) MUST be converted to “dollars” per unit, by moving the decimal two places to the left BEFORE working the problem.

Example 2:

2- a client buys 4 live cattle contracts when the price is at 81.525 cents per pound and later liquidates when the price is at $83.275 cwt. With a commission of $70 per contract, and a contract size of 50,000 lbs, what is the result of the transaction?

A problem such as this will be in your test. It starts stating cents and then, it gives the other price in cwt. You see a dollar sign in one part and are let to decide the other part.

HINT: 81.525 cents per lb = .6530 per pound

$83.275 cwt (cwt means per hundred pounds). = .83275 per pound

SOLUTION: Result of transaction?

4 50,000 lbs $70

# Of Contracts Contract size Commission

Sell .83275

Buys .81525

.0175 PROFIT OF per pound

X 50,000 per contract size

$ 875 PROFIT per contract gross

- $ 70 Commission per contract

$ 805 PROFIT net per contract

X 4 Number of contracts

$ 3,220 Net profit on a trade = result of the transaction

1.3 LIGHTS FOR SPECULATING IN FINACIAL CONTRACTS

As you have seen so far, speculating is the act of purchasing and selling a contract, or vice-versa. You know what to do when you see a commodity price quoted in cents. (See LIGHT3)

Financial contracts are those contracts we purchase from financial institutions. There are two types of Financial Contracts: Short term and long term. We work them differently.

Short-term financials considered 90 days:

Treasure Bills (T-Bills)

Eurodollars

Certificate of deposit (CDs)

Commercial paper (CP)

LIGHT 4 –SPECULATION – Short Terms

ANY Financial Futures with a decimal in the quote is short term, drop the decimal, and each point is equal to $25,00

LIGHT 5 – SPECULATION – short-term Contract sizes

With short term we do not use the contract size to figure the profit or loss on the trade. As soon as you determine it to be a short term financial, follow LIGHT 4.

Example 3:

3- a speculator goes long 6 Treasure bill futures for 91.75 and later offsets the trade when futures are at 92.78. With a contract size of $1,000,000 and commissions of $75 a round turn, what is the result?

SOLUTION - What is the result?

Note that it is a short-term contract!

6 1 Million $75

# Of Contracts Contract size Commission

Sell 9278 - Note that the decimal vanished and we have points

Buys 9175

103 Point gain

X $25 per point value <Instead of contract size>

$ 2575 PROFIT per contract gross

- $ 75 Commission per contract

$ 2500 PROFIT net per contract

X 6 Number of contracts

$ 15,000 Net profit on a trade = result of the transaction

LIGHT 5 – How to find

Long Term Financials considered years:

Treasure Notes (5 and 10 years)

Treasure Bonds (20 years)

Corporate Bonds (20 years)

Municipal Bonds (20 years – Munies)

GNMA (30 years)

LIGHT 6 – SPECULATION Long Term financials

ALL Long Term financials futures have a “hyphen” or “dash” in the quote. All financial Futures with a dash in the quote are in 32nds, and 1/32 = $31.25

Example: 96-14 = 96 thousand dollars plus 14/32 or (14x $31.25) = $437.50 for a total of = 96,437.50

Example 4: – Long Term

Mario sells 3 contracts of September T bonds when the prices was 98-14, and latter off set his position by going long the contracts at 96-18. With Commissions of $60 per contract, and a contract size of $100,000 what is the result of the trade?

SOLUTION – What is the result of the trade?

Note that it is a long term contract!

3 100 Thousand $60

# of Contracts Contract size Commission

Sell 98-14/32 - Note that we have a dash

Buys 96-18/32

Here we have a situation where we cannot subtract 18 from 14. In this case 14 needs to borrow one point from the 98. This way, 98 become 97- (14 receives 32 points becoming 46) – So, it was 98-14 and it became 97-46 (same value).

Therefore:

98-14 = 97-46

- 96-18

1-28 Gross per contract

1-28 = One thousand (plus 28/32 = 28X 31.25 = 875.00) = $1,875

$1875 PROFIT per contract gross

- $ 60 Commission per contract

$1815 PROFIT net per contract

X 3 Number of contracts

$5,445 Net profit on a trade = result of the transaction

It is really important that you learn and follow the above LIGHTS. If not, you will have a difficult time working with the financial problems on the series 3 exam.

1.4 CONTRACT PRICING

It is necessary to observe which form the price was given to you. It can be given in various forms. Although, we only covered a few ways, most mistakes occur when we oversee pricing.

It is not necessary to memorize contract sizes. All the questions of the exam will give you the contract size, even when it is not necessary to know it in order to calculate profit or loss, as in case with the financial contracts. It is however, necessary that you know how to work with the information you are given.

The main difficulty most people encounter is trying to deal with the price quote of a commodity if it is quoted in less than a penny.

$ 2.10 = 2 dollars and 10 cents

$ .10 = 10 cents

$ .1000 = 10 cents (the number of zeros after the decimal point change nothing)

$ .01 = 1 cent

$ .0100 = 1 cent

$ .0150 = 1.5 cents (1 and 5 tenths of a cent) or 1½ cent.

$ .0125 = 1 ¼ cent (1 and 25 hundredths)

$ .0050 = ½ cent (5 tenths or 50 hundredths)

$ .0001 = 1/100^th of a cent

Sugar, for example, is quoted in cents. If the price of Sugar today is 7.25 cents per pound = .0725 dollars per pound. We need to convert into dollars.

Silver, for example, is quoted in cents. If the price of Silver is quoted at 975.5 cents per ounce = $9.755 per ounce or nine dollars seventy five cents and ½ cent.

1.5 SPECULATING FUTURES WITH MARGIN - PROBLEMS

INITIAL MARGIN – PERFOMANCE BOND - When dealing with Futures Contracts, the performance bond invested is called Initial Margin. It can be referred to as Original Margin. The Margin occurs at the end of each trading day whenever a new position is entered, long or short, during the trading session.

The exchange sets the Initial Margin.

It varies from Commodity to Commodity

It usually represents 5% of the total value of the Contract

The exchange may raise or lower margin requirements whenever the board of governors deems necessary.

It is retroactive – it goes to all open contracts and new contracts.

It is not a down payment. It is “good faith” money.

A call made to a client requesting Initial Margin money to be deposited to enter a new position, is called Margin Call.

Margin requirements is usually met by cash

When a client use a financial instrument, such as government securities or stock of the clearing corporation, he will pay the determined “hair cut” which is a percentage of 10 to 20 % of the value of his instrument. T-NOTES 80% of the value is released to the client; T-Bones 80% also, and stocks 75%.

When stocks are used for margin, it is called: Taking the Discount. It can only be used for Original or Initial Margin. Not for Maintenance margin, which can only be met in cash.

The individual firm may require more initial margin per contract than the exchange, but never less.

MAITENANCE MARGIN CALL –

If a client had gone “short” gold at a contract price of $850, and at the end of the day the contract was quoted at $860, the account would have an unrealized loss of $10/oz or $ 1000. Even though the client has not actually taken the loss yet, the account will still reflect decrease in equity.

Therefore, at the end of the day, all accounts are “marked-to-market”.

After the account is marked to the Market, each is reviewed for possible maintenance margin calls. If the equity in the account is lower than 75% of the required (original or Initial) margin, the client will be placed on a maintenance margin call.

Once the maintenance call is “triggered”, the client must restore the account to the full original margin.

No money can be taken when the account only has a balance between Maintenance Margin and Initial Margin.

Example:

LONG 1 NOV SILVER @ $7.50

The original Margin is $1,000. The maintenance margin is $750.00

If in the end of a trading day, your account goes to a balance lower than 750.00 a maintenance call will be originated. The silver contract size is 5000 ounces. If the price of silver closed at $7.40 per ounce, the margin call will be for $500. The client would have to send another $500 to bring the account to the original $1000.

The marked cannot take a client off a maintenance call.

If in the end of the day, the client had equity above his initial margin, it is called Excess Margin and the client can use this equity.

The AP, or whoever handles the account is responsible in making the call and collecting the margins.

The equity can also be used to acquire new positions.

If there is equity less than the maintenance level, the client must bring the account to the initial margin. If the equity is in between maintenance and initial, customer cannot take any money out.

LIGHT 7 - The Chicago Board of Trade members only meet the margin call on the NET positions. In other words, if the firm or IB has clients in 100 long gold contracts, and 103 short gold contracts, the firm will only meet margin call for 3 contracts.

LIGHT 8 – The New York Mercantile Exchange (NYMEX), and the Chicago Mercantile Exchange (CME), requires firms to meet margin calls on ALL positions without netting. The client must meet margin calls on ALL positions. There are no lower requirements for bona-fide spreads.

PROBLEMS – SPECULATING FUTURES AND MARGIN

1- Initial Margin on corn is 20 cents per bushel; a client deposits $5,000 in margin and takes a long position in the maximum number of contracts he can at 291 cents per bushel. Contract size is 5000 bushels. What percentage of the market value of the corn is the customer margin?

HINT:

Customer margin = 20 cents per bushel or $.020 per bushel

Market value of the corn = 291 cents = $2.91 per bushel. This problem is paid over maid.

2- Assume a 20c/bu. is the initial margin for soybean futures on the CBOT. Your client goes short 3 soybeans contracts at $9.80 and commissions are $50.00 per round turn. If she covers her position at $9.63, what percentage of profit (after commissions) did she earn on her initial margin deposit?

HINT:

Calculate the gain per bushel using the speculation method. Remember to multiply the profit by the number of bushels in a contract

Remember to deduct commissions and after, that multiply by the number of contracts. Once the profit is calculated, divide by the margin paid in 3 contracts.

You can also do in only one contract – the ratio will be the same. This problem is made over paid.

3- A Client purchases soybean oil at $46.46/cwt. If the minimum margin is $1100 per contract, what percent of total contract value is required margin? (60,000 pounds/contract).

HINT:

Total contract value is the actual price times the contract size. This is the amount in risk. Remember to move the decimals before doing the calculation. Once found the Total contract value, we then take the margin and divide by the total contract value. Here is paid over maid.

4- September British Pounds are quoted at $1.8960 while the carrying charges to the next delivery month are 1.5 cents per month. If initial margin is $1000 and the September contracts declines to $1.8910, what is the percent of initial margin lost on a long position? There are 25,000 British Pounds per contract.

HINT:

We went long and the price declined. We have a loss.

The mention of carrying charges is smoke.

Calculate the loss and multiply by contract size. Find what the client lost, and then divide by the margin paid per contract. Here is made over paid.

5- If March Wheat contracts are sold short at 400 and repurchased at 415, with a round trip commission of $50.00 per contract, the net gain or loss on the transaction is: (5000 bushels)

HINT:

Wheat is sold in dollars. Move decimal that doesn’t appear two places to the left

6- If $3,500 is deposited and a $.20 per bushel margin is required for soybean contracts currently priced at 875, what is the percentage of required margin gained or lost if the price of soybean declines 3%? (5000 bushels)

HINT:

Wheat is sold in dollars. Move decimal that doesn’t appear two places to the left. We only need to calculate how much is 3% of the price and then multiply it by the contract size. Then divide it by the margin price per contract. It is made over paid.

7- A Trader is long one contract of Japanese Yen on the International Monetary Market of the Chicago Mercantile Exchange at .004267. The original margin is $2500 and the trader unwinds her position at .004415; with $60 per trade commission, what is the return on investment? 12,500,000 Yen per contract.

HINT:

Subtract yen values and calculate the profit. Multiply by contract size to get the profit, or your return. Subtract commission and Divide return by investment. Maid over paid

8- A Speculator deposits $2,500 of original margin and then buys one March Treasure Bill at 90.15, what is the ration of margin to total contract value? ($1,000,000)

HINT: 1,000,000 – 225,375 = 774,625

2500 / 774625 =

9- A trader foresees an opportunity in corn and buys a contract at $4.75 which requires a margin of $.30 per bushel; he deposits $3,500. If corn drops 3% in its value, what percent of his original margin is lost?

Hint: Do it like number 6.

10 COMEX Exchange margin is $2000 per contract for gold. The customer decides to sell one call with a strike price of $800 per ounce and the premium of $20 per ounce. The underlying price of the instrument is $790. The Margin requirement is? (Contract size 100 ounces).

HINT: The COMEX requires that the margin for option writing be the futures margin plus the premium received for the sale.

11 -A corn farmer realizes that his local basis is exceptionally strong, providing an excellent opportunity to liquidate his cash crop at a profit. The farmer believes that the price of corn will continue to rise, but that it is better for him to sell his crop and go long on the “board”; therefore he purchases a July corn contract at 341 ¾ c/bu (5000 bu per contract). His purchase required only 25% of his margin deposit of $5,000. Soon after, the corn prices rose to $425c/bu and he decided to liquidate his futures position. What was his profit? What was his return on required margin? If commissions charged were $50.00 per contract, what was his net return?

12- A livestock producer expects to produce 80,000 pounds of fat cattle. He decides to hedge, selling 6 June Live Cattle contracts on the CME (40000 lbs each contract). His Margin is $7,200 and his commission is $50 per contract round turn. If the price of cattle was $76.05 cwt when Joe sold his six contracts, what was his net speculative gain or loss if he liquidated at $71.10cwt?

13- Your client goes long 3 contracts of May Sugar, which was filled at 8.95c per pound. His position is liquidated at 8.60c per pound. What was the total value of one sugar contract when your client bought it? (World Sugar contracts are 112000 lbs.). What was the net gain or loss on the trade, if round turn commissions are $65.

14- A crude Oil speculator is expecting a decline on the price of crude oil. He sells 3 contracts of March Crude at $96.00 /bbl. He then sells 5 additional contracts at $94.00/bbl. He decides after all to purchase 10 contracts at 94.75. He sells 2 contacts at $97.65/bbl (barrel) What is his profit or loss after commissions, if commissions are $60 per round turn? (contract size =1000 barrels or 42000 gallons).

CHAPTER 2

2- Hedging FUTURES –

2.1 – Basic Hedging problems and how to approach

2.2 - Basis calculation Problems

2.3 - Hedging commodity futures – Chapter 4

2.4 - Hedging Financial and Monetary Futures – Chapter 5

Hedging is the purchase or sale of a futures contract in anticipation of a later purchase or sale of the cash commodity. It can also be said that a hedger, in order to avoid price risk, transfer that risk to the speculator.

It is against the regulations to speculate in a hedge account. Hedging reduces working capital requirements.

There are two types of hedgers. Long hedger and short hedger

A Hedger who grows, manufacturers, or has a product in inventory is sometimes referred to as a “producer”. This hedger has it; therefore he is a seller, or short hedger. As a seller of a commodity, he would like to see the price of the commodity increase in so that when the time comes to sell his product, he will sell it at a higher price. The risk is in the possibility that the price will drop. To protect himself against a loss in a down market, the hedger will short the futures by placing a selling hedge.

A Hedger who will need that commodity in the future is sometimes called a “user”. This hedger needs it; therefore he is a buyer, or long hedger. The hedger would like to see the cash price drop, so at the time of purchase, the cost will be less. His risk is the possibility of an increase in price, for it would cause the user to spend more money. To protect against a possibility of an increase in price, the user will buy the futures contract. He will place a long hedge.

Before hedging, both the producer and the user would be at price risk. Once hedged they are at basis risk,

The futures position is also called the hedge or the substitute.

BASIS – Defined as the price difference between the cash commodity and the price of the futures.

Cash – Futures = Basis

When determining the basis, ask yourself where is the cash price in relation to the futures price. Is it under or over and how much. The basis reflects whether the cash is over or under the futures price.

Trends of the basis are: Strengthening, weakening, widening or narrowing

Who usually hedges?

- Importer, exporter, manufacturers

- In currencies to pay out with low value …be paid with something of higher value.

- In Financials to match maturities by hedging long term instruments with short-term instruments and vice-versa.

- When you issue, it means that you are going to sell something and then you invest it means that you are going to buy something. Want the cash price to go down.

HOW TO APPROACH?

1- When doing hedge problems you need to determine your positions in the cash market, futures market, and basis. Place yourself in the trade and ask yourself if you have the product or if you need the product. If I have it I am short the futures. If I need it I am long the futures. The cash and basis are always the same, and they are the opposite of the futures. If you are short the futures, you are therefore long the cash and long the basis. If you are long the futures, you are therefore short the cash and short the basis.

2- The Futures means the Hedge means the Substitute.

3- Start asking yourself what would you do in the future? Buy or sale, and start from here. If you remember that a producer hedge has it, therefore he is Selling or short Hedge (short the futures). When you are selling the futures you are long the basis, and as the basis becomes more positive, more going up, or strengthening you make a profit. You are also long the cash.

When working Hedging problems, we will work with basis calculation, and it is imperative that we learn how to manipulate each problem.

3 100 Thousand $60

# of Contracts Contract size Commission

Cash Futures Basis

S L S

Place

Target or Cash Price - Futures Price = Calculate!

Near date

Lift

Actual Cash Price - Futures Price = Calculate!

Far date

CHANGE Calculate! Calculate! Calculate!

Things you need to know:

1- What is the position of the cash ___ Futures ___ Basis ___

2- What is the contract size __________

3- How many contract should be hedged ______

4- What are the commissions

5- What is the target (buy/sell) price_____ and futures price____

6- What is the actual (buy/sell) price_____ and futures price ____

Continuation....

CHAPTER 1-

FUTURES TRADING THEORY AND BASIC FUNCTIONS TERMINOGY
You will be tested with 125 questions on these 16 topics.

1- General Theory

2- Cash markets

3- Forwarding Pricing

4- Efficiency

5- Liquidity

6- General Contract Functions

7- Normal and Inverted Market

8- Hedging Theory

9- Short Hedge

10- Long Hedge

11- Speculation Theory

12- General Futures Terminology

13- Cash Transactions

14- Forward Contracts

15- Futures Transactions

16- Options Terminology

17- Discussion Hints.

Let’s now analyze each Topic and possible questions on each topic.
1- GENERAL THEORY
The futures Industry affects the lives of millions of people by touching the food we eat, the clothes we wear, and the material that give us shelter.
With the growth of our population and the need for more food, it was necessary to have more output of food, and it required machineries with the ability to produce more food. Transportation, agricultural storage and efficient distribution were required to keep up with the new productivity.

2- CASH MARKETS
There are two types of cash markets. There are two types of them. The first is the market we are familiar with. For instance when you purchase gold in a local store, the dealer will look at the current “going” price for gold, then add his “mark-up” to arrive to a retail CASH or spot price, which you must pay. A farmer would sell his product and receive the “going” or “cash” price, is another example.

The second type of cash market is known as the “cash forward” or to “arrive” market.
A cash forward contract is negotiated between buyer and seller, one-on-one, for a specific product, at an agreed upon price, and for a future delivery.

The difference between Cash forward contracts and futures contracts is that the buyer and seller do not meet. Instead, the transaction takes place in a trading floor of the commodity exchange. There are over 87 commodities, and they are traded in different market exchanges. The commodities are traded in an auction market. The futures contracts are legally binding. The main advantage of futures contracts is that it allows speculators to participate, bringing therefore, liquidity. It is standardized, with a set quantity, quality etc. This ability to speculate and hedge in the futures contracts help to keep prices lower. The futures market provides price forwarding because its liquidity. We are talking about price forwarding here… do not get confused with cash forward mentioned before.

3- FORWARDING PRICING
A risk of price change exists unless goods are sold or consumed immediately. Futures Markets provide a means for determining prices in advance for period of a year or more. Prices are established by the interaction of supply and demand, more specifically, by the bids and offers of buyers and sellers. A farmer or a businessman can secure a price for his needed goods of marketable wares in advance of their availability in the cash markets. Forwarding pricing is also available in forwarding contracts were the terms are negotiated for future delivery. The act of knowing the price of goods in a future time is known as “price discovery”.

4- EFFICIENCY
A Large number of traders gather in the pits, allowing prices to be determined readily. The more people involved, the larger the number of contracts traded, increasing liquidity, and consequently efficiency of the market.

5- LIQUIDITY
This term refers to the ability to move quickly in or out of the market at or near the last purchase price, and it relates to the number of participants in the market. The more liquid the market, the faster and more easily trade can be executed at or near specific prices. Without futures market in which to trade, the prices of commodities would not be determined as efficient, and probably be higher. This efficiency also helps the cash markets because the cash markets can use the more efficient determined futures prices. Another feature of liquidity combined with efficiency is the easy access for anyone who needs to transfer risk, or is willing to accept the risk. There is a readily accessible meeting place in which to do so. For every buyer there is a seller, and vice-versa.

6- GENERAL CONTRACT FUNCTIONS
A future contract is legally enforceable agreement to make delivery or to take delivery of a specific quantity and grade of a particular commodity, or cash during a designated delivery period (the contract month).
It is not necessary to hold the contract until the delivery period. If so, it will be required to make or take delivery. At any time, before the last day of trading for the contract month a contract can be repurchased or resold. The action of repurchasing or reselling a trader’s initial position offsets his initial position and frees the trader from any further obligation under the contract. It is fair to say that nearly 97% of all futures positions are liquidated before it expires and there is not delivery. The ability to deliver helps maintain the economic relationship between cash and futures prices.
The central theme of commodity futures markets is standardization. Contracts are standardized with regard to commodity, quantity, quality (grade), and point of delivery.
People that take delivery or make delivery are called user or producers. We refer to them as hedgers. These people do not like to take the risk of a price fluctuation. They try to lock in a price today for a merchandized that will be delivered in the future. Those who bid on price fluctuation are called speculators. Speculators are willing to accept the risk.
Risk transfer is facilitated because each contract for a particular commodity in a particular delivery month is identical in all of its terms with every other contract for that commodity and that delivery month. These parameters are interchangeable – another name for it is: fungible.

7- NORMAL AND INVERTED MARKET
Cash prices and future prices tend to move in tandem. The deferred futures prices are usually higher than the near cash price for non-financial contracts.
Normal market is associated with holding the commodity until the contract goes into delivery. The costs to hold these commodities are called “carrying charges or cost to carry”.

NORMAL MARKET – When cash prices of commodities are lower than futures prices.

Another name for normal market is Premium Market. Futures have a premium above cash prices. Futures price is higher.
INVERTED MARKET – When cash prices of commodities are higher than futures prices.

Another name for inverted market is Discount Market. Discount on futures prices from cash prices. Cash price is higher.

NORMAL MARKET BRINGS A DISCOUNT BASIS

INVERTED MARKET BRINGS A PREMIUM BASIS

Inverted Market is caused by tight supply, high demand or an expected surplus. These circumstances cause current price to be higher than deferred prices.

Usually, the cash and futures prices move in the same direction by approximately the same amounts, making possible to hedge a position in the cash market by taking an opposite position in the futures market.

8- HEDGING THEORY
Hedging is the transfer of risk from one party to another.

The hedger reduces his price risk and assumes basis risk.

Basis is less volatile than prices, therefore the hedgers effectively reduces his overall risks.

Basis is the difference between cash and futures prices. (CASH –FUTURES=BASIS)

A hedge position in futures may not give full protection against an adverse price movement because of changes in the basis.

9 - SHORT HEDGE
Selling short is the sale of a contract with the promise to deliver the commodity or repurchase the contract at a future time.
An individual who produces or someone with an inventory who has or will have the commodity for sale in the future enter into the market now, trying to transfer the risk of a price change by selling short that commodity now in the futures market, with today’s price. Once he entered into the market he has two positions: A long cash position (the commodity he is holding) and a short futures position.
A short hedger promise to deliver goods in the near future, therefore he either delivers goods, or buys back his contract. It is fair to say that a person who goes short the market wants the price to decline, after he had entered. He sold today something for a price, and in three months he has to buy it back to get out of his obligation, and keep his profit from the hedging.
Another name for short hedge is: Substitute sale:

10 – LONG HEDGE
Buying long is the purchase of a futures contract with the promise to take delivery of the commodity or resell the contract at a future date.
An individual who processes goods that others produce, or an individual who uses it or a merchant who buys it to sale later for profit are example of long hedgers.
A person who goes long the market wants the price to go up.
Another name for long hedge is: Substitute purchase
When hedging we take two positions. We are either are long the futures or we are short the futures. These positions require that we do the opposite with the cash position. The base takes the same position as the cash position.
A long hedger is long the futures market, short the cash and short the basis.

11- SPECULATION THEORY
Speculators try to forecast price changes and take positions based on their forecast. They are people like you and me, who can make money if they forecast correctly the direction of the price of any commodity, or lose money when they are wrong. Their role is to add liquidity, and not to forecast prices.
Speculators have no interest in owning the physical commodity, so they offset their futures position before delivery.
Speculators increase liquidity in the futures market. Liquidity here is money, which enable the market to operate more efficiently.
The more speculators, the more liquidity we see in the market, therefore Market Liquidity is found by increasing the number of traders.
Increasing trading volume allows large trades to be executed without dramatically affecting prices. When I say large trades, I mean large orders.
If we have only few speculators, and a large trade is executed, it can change the price of the commodity faster than when we have more speculators. For every contract traded by hedgers (Participants that usually take or make delivery of a commodity), there may be 30 or more contracts traded by speculators. Increasing trading volume allows large trades to be executed without dramatically affecting prices. When I say large trades, I mean large orders.
Prices change for a reason, and knowledge of factors affecting the market enables speculators to forecast price movements. This knowledge is one factor separating speculators from gamblers.

12- GENERAL FUTURES TERMINOLOGY
Let’s compare: FUTURES CONTRACTS WITH:
13- CASH TRANSACTIONS: buyer and seller exchange goods for cash.
14- FORWARD CONTRACTS: is the same as cash forward sales or cash forward purchases. The execution will be carried sometime in the future. The terms are negotiated between buyer and seller. It is more difficult to do, for you need to know the seller. Hard to get out, for you need to find a buyer that you know. It can be done with a contract specifying grades etc.
15- FUTURES TRANSACTIONS: Is the terms of a futures contract and they are established by the exchange and are known to all. This facilitates trade because the exchange stands behind each contract. Because all contracts are fungible (identical), it is possible to offset (sell or buy back) a previously established position. To offset a long future contract, you sell the same contract. To offset a short future contract, you buy the same future contract
When futures prices call for execution, prices converge, meaning that the futures price will be equal to cash prices. It happens near expiration.
IN SUMMARY: Cash forward contracts and futures contracts differ in that:
A- Futures terms are standardized – Cash Forward terms are negotiated
B- Futures positions are easily offset – Cash Forward terms are decided before and may be impossible to cancel.
C- Futures are traded in exchanges and subject to Federal regulation – Forward Contracts are not
D- Open outcry or competitive bidding determines futures prices – Forward price are negotiated between a buyer and a seller.

16- OPTIONS TERMINOLOGY
Long a Call – The option purchaser has the right to buy the underlying futures contract at the same strike price as his call, within a certain period of time.
Long a Put – The option purchaser has the right to sell the underlying futures contract at the same strike price as his put, within a certain period of time
To better understand long and short calls and puts, let’s use some symbols to refer to them in relation to the markets.

A Long –  -Takes an arrow up – We will say he wants the markets to go up.
A Call –  - Takes an arrow up – We will say he wants the markets to go up.

When we have arrows in the same direction going up for an option, we will say that it is bullish, and the client upon exercise of his option will obtain a Long futures position.

A Short –  -Takes an arrow down – We will say he profits if markets go down.
A Put -  -Takes an arrow down – We will say he profits if markets go down.

When we have arrows in the same direction, even going down, we will say that it is bullish, and the client upon being exercised by the long will obtain a Long futures position.

Long a call –   - Bullish – Have the choice of exercising – receiving a Long Futures Position.

Long a put -   - Bearish – Have a choice of exercising – receiving a Short Futures Position
Short a call -   - Bearish – If exercised upon – Receives a Short Futures Position

Short a put -   - Bullish – If exercised upon – Receives a Long futures position

When dealing with options being exercised is important to remember these arrows to find out whether it is bullish or bearish. Bullish takes a long futures Position while Bearish takes a short futures position.

A client, who purchases an option contract, pays for the premium
A client, who sells an option contract, receives the premium from the buyer.
By receiving the premium, a seller (short) is obligated to purchase a future contract.
In other words, the seller is taking the premium home. His only choice here is to buy back an exact option contract like his, to offset his position. This will happen faster if prices go down. If so, he will get the same contract cheaper and keep the profit.
Now, if markets go up, the Long will exercise his right of exchanging his contract for a futures contract, putting the seller into a harder situation and unlimited risk.
By paying the premium, a buyer has 3 choices. Let his contract expire, sell his contract to offset his position or exercise his right of exchanging his contract to a futures contract. Once he exercises, the seller is obligated to take the opposite position in the futures, which will bring more profit to the buyer than to the seller. Long only exercise if the market go on their direction.
When comparing Options and Futures is important to know:
- Standardization is a benefit for both futures and options on futures.
- Margin must be deposited for futures – When dealing with options, margin is required only when an option is sold. Short a call requires margin. Margin is required for the writer because he may be exercised by the longer and may have to deliver the underlying futures position.
- Margin is not required to buy an option
- The option is purchased for a premium
- The premium of an option is the value in which the option will be sold, and it fluctuates as supply and demand interacts.
- The risk involved when buying an option is the premium paid.
When you buy an option, your risk is only the premium paid. Even when you buy a put, which will give you a short future position if you exercise, we know that you would only exercise if you were deep in the money.

As an example: If you go long a put. Although, in futures we learned that if we go long we want the market to go up, it doesn’t apply in options alone. In options when we go long it just mean that we purchased the contract and that we have the right to exercise it because we paid the premium. The “call or put” is what decides how we like the market to behave.

Put me DOWN – Puts wants the market to go down. Be it long or short
Call me UP – Calls want the market to go up. Be it long or short.
This theory is to be used during the duration of an option contract. If the position was liquidated, we then calculate profit or loss.
The buyer of a put has the right to sell his contract at a specific price within a certain period of time. He will sell if prices go on his direction. If not, he lets it expire and loses only his premium.
Buyer of a put – Maximum he can lose is the premium, for he decides whether to let expire or to sell. If prices go down, he will be deep in the money, and he will exercise it, obtaining then a short future position, which will allow him to make more money in the futures. If he sold it, he will cease his obligation without receiving a futures position. This is one of the rights of a buyer of an option. He can sell it, let it expire or exercise.
Lets analyze each one with a simple example:
Long a Put – wanting prices to go down

A costumer buying 800 June COMEX gold futures put. We rewrite this way:
Long 1 800 June COMEX Gold put @ 50.00
Long – He is the buyer, therefore he has the right to sell it, let it expire or to exercise.
1 – Number of contracts – Gold contract size is 100 oz.
800 – The same as $800, which is the strike price of the option.
Gold –The commodity of the underlying future contract of this option.
Put – The right to sell it – Wants price to go down PUT ME DOWN
$50.00 – The premium paid to the seller.

Now, let see with a current market value of gold today:
CMV = $730 per oz.
Client long call exercised: He received a Short Futures contract – Now he exchange his option contract for a similar Futures Contract that will read:
Short 1 COMEX June Gold @ 800
Now that he is short the futures – He wants price to go down, and the price is exactly 730.00. Now he became a seller of a futures contract, and he thinks that this profit is good enough, and decides to off set his short position by purchasing the same contract with the strike price of 800, when the market price is 730.

He then went Long 1 COMEX June Gold @ 730 offsetting his position and making the profit of $70.00 per oz. gross.
In dollars it would be $7,000.

If while being short, he still thinks that the gold would go down even further, he could continue with his contract open and receiving $100 dollars for each time the gold would go down one dollar per oz. When to get out of the market is the job of the AP who will be watching the futures market behavior to get out on the right time.
Long a Call wants price to go up
Long 1 800 June COMEX Gold call @ 20.00

Long – He is the buyer, therefore he has the right to sell it, let it expire or to exercise.

1 – Number of contracts – Gold contract size is 100 oz.

800 – The same as $800, which is the strike price of the option.

Gold –The commodity of the underlying future contract of this option.

Call – The right to buy the futures contract – Wants price to go up – CALL ME UP

$50.00 – The premium paid to the seller.

Current Market Value = $730.00

When he purchased he thought the market had found a bottom, and was going up more than 900 for him to sell it. However, the market went against him. Because he purchased it and paid the premium he has 3 choices. The first is to let it expire and lose only the premium, regardless of the market movement. The second it to sell his option for a lesser price, for the premium for an option so out of the money is lower than what he paid. That is not necessary. The other is to exercise, but he doesn’t want to get a Long futures position and be losing much more money than the premium. So he will let it expire and lose his premium of $50.00 per oz.

100 oz X $20 = $2,000

We go long a call when we think the market value of the underlying futures contract is going to increase. If we are wrong our loss is limited to the premium paid.
If they increase, we can exercise and get into futures without paying any margin. Once in futures, chances are the writer will offset and cut his losses.

Short a Put = wanting futures prices to go up
We refer to futures prices – the price of the underlying commodity when the contract was exercised. If it was exercised. As far as the option, the put wants the price to go down to get out by buying the same contract strike price for the current market value.
A costumer selling a 800 June COMEX gold futures put. We rewrite this way:
Short 1 800 June COMEX Gold put @ 50.00
Short – He is the seller, therefore he has the obligation to deliver if exercised upon.

1 – Number of contracts – Gold contract size is 100 oz.
800 – The same as $800, which is the strike price of the option.
Gold –The commodity of the underlying future contract of this option.
Put – The right to sell it – Wants price to go down – PUT ME DOWN
$50.00 – The premium received from the buyer.

Now, let see with a current market value of gold today:
CMV = $730 per oz. – The short can buy it back and keep the premium and eliminate the contract.
Long client will let the option expire. He loses the premium
If prices had increased, instead of gone down, then the buyer of a put would exercise and the short put had to get out immediately.
We go short a put when we think the market will go down. Although we make money immediately if the option value decreases, Ultimately, if we are exercised upon we want the market to go up.
The goal of a short put is to see the price stay the same forever or going up.
Going short a put – Maximum gain = Premium
Risk – Unlimited
Short a Call – call wanting futures prices to go down = opposite arrows
A costumer selling a 800 June COMEX gold futures call. We rewrite this way:
Short 1 800 June COMEX Gold call @ 50.00
Short – He is the seller, therefore he has the obligation to deliver if exercised upon.
1 – Number of contracts – Gold contract size is 100 oz.
800 – The same as $800, which is the strike price of the option.
Gold –The commodity of the underlying future contract of this option.
Call – The right to buy it – Wants price to go up or stay flat. CALL ME UP
$50.00 – The premium received from the buyer.

Now, let see with a current market value of gold today:
CMV = $830 per oz.
In this case the long will let it expire and lose his premium only.
The short call gets his maximum profit – the premium already received.
If prices had increased, instead of gone down, the long would have exercised.
The seller of a call, when exercised by the long, will deliver a Long Futures to the call holder at the strike price (price written in the option contract, and not the current market value), thereby establishing a short futures position in his own account.
The short call, which now has obtained a short futures position may lose all his money if prices keep going up. He sold a call
The call holder now is long futures or offsets an existing short.
SHORT A CALL - wants the price to stay flat or to go down. Although it is a call, the seller intentions is to keep the premium, and the only way for him to keep the premium is to see the market going down for the holder to let it expire. This is when in futures. If it is an option, call wants price up to get out of the obligation.
We go short a call when we forecast the market staying flat or going ultimately down.
Going short a call – Maximum gain = Premium

Risk – Unlimited
RISK - The unlimited risk with options exists when we short a call or short a put. So, selling an option without being covered with the futures can be extremely risky. This action of selling an option without any coverage is called naked option.
When you go long with options you risk only the premium.
Summary:
Long Options – The owner of an option has a long position. He paid money (the premium) for the right specified in the option contract. The CFTC requires options buyers to pay full premium when the option position initiated.
- The owner of a call has the right to buy the underlying futures contract at the specified strike price any time up to expiration date.

- The owner of a put has the right to sell the futures contract at the specified strike price until the expiration date.

Short Options
- The seller of an option has a short position. He receives money (premium) to take on the obligation specified in the option contract.
- The seller of a call is obligated to sell the underlying futures position contract at the specified strike price to the holder of the call if the option is exercised by its expiration date. For promising fulfillment under contract provisions, the writer receives the premium.
- The seller of a put is obligated to buy the futures contract at the strike price any time through the expiration date if the put owner exercised the option. For agreeing to the contract terms, the put writer receives the premium.
INFORMATION FOR THIS CHAPTER:
1- Futures Market provides forwarding pricing, attract speculators, Assemble, standardize, and grade commodities.
2- Hedgers primary motive is to cut costs.
3- Offsetting a futures contract doesn’t require deliver, in fact almost 97% of all contracts do not end with a deliver.
4- Only when delivery takes place that the title of a commodity is transferred.
5- Without futures markets prices would probably be higher.
6- Speculator is a person who subjects himself into price fluctuations by buying or selling economic goods.
7- To hedge against something, means to go with the flow. Hedge against rising price we go along with the profit that we get when prices rise. We go long futures.
8- Hedging is the act of selling futures against an insured crop.
9- A Long hedge does a substitute purchase while the short hedge does a substitute sale.
10- Another difference between cash and futures Markets lies on inspections procedures, commodity grade and ability to offset before delivery.
11- Speculators besides assuming the risk provided by the hedgers they provide liquidity.
12- There are two types of options contracts. Call Option and Put Option. A Call option gives the purchaser of that option the right to purchase the underlying futures contract that accompanies an option. A Put option gives the purchaser of that option the right to sell the underlying asset within a certain time period at a specified price.
13- Speculators besides liquidity offer volume to the market. More contracts being exchanged when they are involved. Without volume, a contract’s price will tend to display increased volatility.
14- Forward contracts are different from futures contract because forward contracts are non-standard, non-regulated and non-competitive.
15- We go short a futures contract when we think the price of that commodity is going to decline. Our protection against a price decline is to go along with the decline (flow), and profit from it. So, in a declining market one goes short.
16- Short hedgers plans on selling his product on a future date.
17- Short the basis means that we do not have the physical commodity, but will need to buy in the future.
18- A Long put option position has the right to sell the underlying asset at a specified price during a certain time period. A long put is the option purchaser, and if he exercises, he receives a short futures position at the strike price of the option, and not the current market value.
19- A speculator sells a call when he expects prices to decline, and if they do, he keeps the premium.
20- Option contract is a wasting asset because the premium deteriorates as times passes. Futures contracts’ margin deteriorates as well, if prices go against you. In a flat market a call seller will keep the premium he received from the call holder. Both futures and options have limited duration.
CALL PUT
Buy / Sell Buy / Sell
Buy a call: Think the market will go up 
Sell a Call: Think the market will stay flat  or go down 
Buy a put: Think the market will go down 
Sell a put: Think the market will stay flat  or go up 
21- A Long futures put position has the right, not the obligation to sell a futures contract.
End of this chapter.

If you like it, leave a comment -
Milton Laene Araujo
January 2011

10/23/11

Legalization of Drugs - By Milton Laene Araujo

Get a grip of yourself - by Milton L. Araujo: Legalization of Drugs - By Milton Laene Araujo: During the prohibition of Alcohol, often referred to simply as prohibition , is the practice of prohibiting the manufacture, transportation,...

Legalization of Drugs - By Milton Laene Araujo

During the prohibition of Alcohol, often referred to simply as prohibition, which was the practice of prohibiting the manufacture, transportation, import, export, sale, and consumption of alcohol and alcoholic beverages. After several years, prohibition became a failure in North America and elsewhere, as bootlegging (rum-running) became widespread and organized crime took control of the distribution of alcohol. Today America is facing a bigger challenge with the Drug market. Too much money spent to fight the war on drugs, which will not end, unless drugs are legalized.
Today we spend yearly:

27.5$ billion for Law Enforcement. The third biggest cost is law enforcement activities at 27.5$ billion(subfunction 751) This is the police, FBI, DEA, etc… This doesn’t count court costs.
7.3$ billion for Prisons. The cost of Federal Correctional activities(subfunction 753) is recorded as a separate subfunction from Law Enforcement.

Considering the amount of people that are incarcerated by drug related offenses (51%) it would be viable to legalize drugs and use the saved 10 Billion to invest on Education about drugs.

Today America is number 37 in the rank of 132 countries distributing a percentage of the GDP into Education. It contributes with only 5.7 % in a percent range starting from 1.6% to the United Arab Emirants and ending with 18% with Cuba. America Spends 4% of its budget in Education and 2% in protection.

Observing only the economical factor, one should consider that by legalizing drugs more money would be collected in taxes to be applied in education. Today America spends 23% of its budget in defense, and it is fair to think that it interrelates with defense against drug related cartels all over the world; Investigation costs related to international trafficking etc. Therefore, it is fair to say that by legalizing drugs a small percentage would be used to invest in education. To finalize, consider marketing, and sales and profits and taxation. Some types of drugs may become a commodity and participate in the futures marketing.

This process will be interesting to watch, for every dealer will be against one another, and some riots would be imminent. As far as We the people, the only thing to do is to educate everyone and enforce mandatory classes about the consequences of using drugs to obtain a license to purchase.

In a "Local Store Drugs" - The name of the Facility where people will purchase their drugs, there will be various containers with all types of drugs and bellow each of them will have a description of the consequences of using it.
Bellow the crack-cocaine jar a big sign with this description: If you take this drug you will die. At frist you will get an intensive high and a feeling of awesomeness that will last 3 minutes. Then you will crave for more, and more, until you can not stay awake. Meanwhile your digestive system shrinks. You can not eat. You become de-hydrated and you lose weight rapidly. Moods swings will make you lose your job, lose friends and consequently you will lose everything. Life Expectancy - 1 Year.

The entire purchase would be recorded and only people above 21 can purchase it. Doctors will prescribe and monitor patients, while science is developing a home kit of self-drug-test for people to be able to control their intake and keep in to a range acceptable to their blood flow. Employees will be tested as they arrive at work, and be sent home if not sober. There will be more clinics for addicts, who will learn to cope with their addition or else, be incarcerated.

Families will be educated of the danger and expose their kids at an early age to all the bad associated with all drugs, to prepare them for a productive life.

By legalizing drugs, we are letting the evil of addiction to become a choice between yes and no. It is not as easy as "Just Say No" to drugs, for one has to learn what happens when influenced by such a drug. The same type of education must be given about any other drug that is sold in drugstores today. Most of them are addictive. I know people addicted to chap sticks, pain killers, cough drops, nasal spray, eye drops, cortisone, xanax, .... and so forth and so on. Drugs, as medication, will make you feel better, but eventually dependent forever. Yet no one knows what they are truly taking. The Drug company is one of the biggest in the world and manufactures on drug to fight the other drug - It is a mix-bag of chemicals that will target a population.
For example: If you have heart-burn you take a Pepsid AC., which is a base, and it neutralizes the acidity in your stomach giving a sensation of well being. Once you start taking a base to neutralize the acidity in your system, you are opening a door for an addiction. Next day you wont be able to drink a glass of orange juice if you do not take a Pepsid before or after. It is normal to have acidity after drinking alcohol, and the remedy is any base such as tagamet, Pepsid, Milk of Magnesium, etc.

Unfortunately, most of the people are not well educated to accept this as a solution for some of our problems and some problems in the world. But the idea of this article is just to compare what can be done with what is happening now in our Country. And furthermore, to express "it is all about the money". It all makes sense.

See bellow our prisons and the amount of people doing time for drug related crimes.

Total population:	217,363
Total sentenced population:	198,459
Inmates in BOP facilities:	180,725
Inmates in privately-managed secure facilities¹:	22,939
Inmates in other contract facilities²:	13,699

Today, American Citizens are paying top dollars to keep people incarcerated. Lets check the offenses committed:

Drug Offenses:	101,929	(50.4 %)
Weapons, Explosives, Arson:	30,733	(15.2 %)
Immigration:	24,279	(12.0 %)
Robbery:	8,366	(4.1 %)
Burglary, Larceny, Property Offenses:	7,165	(3.5 %)
Extortion, Fraud, Bribery:	10,529	(5.2 %)
Homicide, Aggravated Assault, and Kidnapping Offenses:	5,571	(2.8 %)
Miscellaneous:	1,798	(0.9 %)
Sex Offenses:	9,772	(4.8 %)
Banking and Insurance, Counterfeit, Embezzlement:	883	(0.4 %)
Courts or Corrections:	645	(0.3 %)
Continuing Criminal Enterprise:	515	(0.3 %)
National Security:	97	(0.0 %)

10/22/11

Get a grip of yourself - by Milton L. Araujo: Community Political Systems by Milton Laene Araujo...

Get a grip of yourself - by Milton L. Araujo: Community Political Systems by Milton Laene Araujo...: American communities are very diverse, when referring to Community Politics, due to its population size, square miles, and socio economic co...

10/17/11

Community Political Systems by Milton Laene Araujo

American communities are very diverse, when referring to Community Politics, due to its population size, square miles, and socio economic composition. In the U.S there are more than 87000 local governments, these includes cities, municipalities, townships, counties, and a host of other districts and special districts. Nearly 2/3 of all Americans live in urban units of local government known as municipalities. there are about 280 metropolitan areas ranging in size from Oklahoma to New York. Community Political System is rural counties, towns and villages, cities of all sizes, or even sprawling metropolitan areas. The two principal functions of Community Political Systems is firstly, to supply good and services for example; policy Protection or sewage disposal that are not supplied by private enterprises - known as service functions. Secondly, to manage conflicts over public policy - known as political functions.

A good politician manages conflicts when he or she undertakes to arrange political compromises and balance competing interests. A good politician help people with different incomes, occupation, skin colors, religious beliefs and styles of living to live together in a reasonable peaceful fashion. This is a vital task,and often a difficult one. The sources of community conflicts are human diversity; difference in wealth, occupation, education, ethnicity, race, religion, and style of living. To cope with community problems, individuals resign from the situation and do nothing and just tolerate it, or move away and find a community that provides more satisfaction, or people stay and make an attempt to change things. To cope with community problems, political scientists tend to focus their attention on people who try to change things implying that this is the only way to respond rationally to community problems. To cope with community problems economists emphasize rational calculations and freedom of choice, which they assume most citizens possess.

People respond to community dissatisfaction more or less in this fashion:
White rich become politically active or move out, while white poor simply move out. Blacks typically become more active, while new affluent black middle class move to suburbs. Some city residents move out, while suburbanites fight. Immigrants stay and don't fight until about the third generation. We should care about the structure of local government because they pat hole in the middle of our streets, zoning, parks, schools, building of new public offices in the neighborhood, safety and police, traffic lights, airports, libraries, mass transit, sewage and sanitation, beautification, land value, etc. Citizens should focus on the local levels to know who fires and hires various types of local officials and drafting and approving budgets. In Lake Worth, FL commissioners are elected by voters living on his or her district.There are over 1000 Special District in Florida that allows counties to push off difficult and expensive services, health care, schools water and other bodies. Special Districts have their own bonds and taxes that appear on our bills - so called - a sneaky way to raise taxes.

The basic structure of local government is that States are divided into Counties and within counties we have municipalities. Like this: Florida...Palm Beach County....Lake Worth

Local government is responsible mainly for Police, fire, trash and also to manage conflict development. Local Government have no status in the U.S Constitution. They exist based on state laws only, and in Florida they can be created or abolished by the state.

What is Dillon's rule? Local government only gets those powers set forth in the charter. Only the state legislator can change (amend) the charter - they retain local power.

A City Charter - It is the basic constitution of a city of a county, set forth boundaries, powers and functions, structure and organization and means of election and appointment. It is a document that covers in detail matters such boundaries, structure of government, ordinance making powers, finance contracts, law enforcement, education health, public utilities, and so on. It requires a state legislator to change it and usually a referendum as it requires a special law. Ordinance is what we call a local law, and it operates within their boundaries.
What is Home rule? This rule was created to reverse Dillon's rule. It is a charter that authorizes a city to exercise all powers not specifically prohibited by law or by charter...Politics in Home rule?? Courts retain local powers - whether the city can pass the law or provide service - The city attorney becomes the key.

In Florida we have limited home rule based on our constitution, which translates to freedom for local government to structure their governments as they see fit.
There are different types of local government in Florida, such as Counties -rural and urban-, Cities, School Districts -independently in charge of running primary schools- , Special Districts such as the water management district.

The governing body of a county is the County Commissioner who often appoints a manager (administrator) to run the county, then we have elected officials, such as sheriff, judge, property appraiser, tax collector, clerck of the court, etc... The county bureaucracy deals with planing, transportation, health , libraries. The main function of a county is that different offices must work together, as in the Palm Beach County Government. Legally speaking, cities are "municipal corporations."

Nonpartisan elections have candidates name without their party afiliation.

Milton Laene Araujo

10/16/11

President's Emergency Powers by Milton

The Constitutional views of the president’s emergency powers have brought “erosions” into civil liberties, but the formal powers of the executive provided by article II are without substance if the president is unable to persuade the major constituencies in and beyond the government that their interest are mutual.

This discussion of executive power involves one central question: To what extent is the president authorized to act on behalf of national interest in times of foreign and domestic emergencies in absence of law, or in defiance of law? If we consider presidential actions in time of crisis from the earliest days, President Washington considered a constitutional prerogative of his office to quell domestic insurrection by using force, if necessary, against Indian tribes. Thomas Jefferson stretched the outer boundaries of his office to his successful campaign to purchase Louisiana from France in 1803. Several presidents in the nineteen-century, engaged American troops to fight the so-called quasi-wars, to secure American commercial interests. Lincoln’s’ broad and bold use of executive power defended the prerogative of the executive to go beyond what either the court or congress had recognized as the written law governing the president’s roll as commander in chief. Then again, no president had been faced with an internal crisis that was remotely comparable to the civil war. Thus it was no surprise that the court was soon called upon to decide whether Lincoln’s invocation of executive power to conduct and manage the Civil War violated the Constitution. The Court in Prize Cases (1963) was presented with the question of whether President Lincoln’s command to impose a naval blockade of Southern Ports usurped the power of congress to declare war. The court provided Lincoln with his constitutional foundation to conduct his aggressive prosecution of the Civil War. Later, the Court made clear that Presidential power to suspend constitutional rights of civilians and exercise executive prerogative, not extended beyond wartime emergencies. By the time U.S entered into World War II, the court had given President Roosevelt fully and complete power to impose emergency domestic measures in the service of National security interests, whether economical or political in nature, regardless of their impact on the civil liberties of the United States Citizens. As an exercise in raw executive power, in 1942 President Roosevelt decided to order the evacuation of Japanese Americans from the West Coast and intern them indefinitely into makeshift prison camps. In Korematsu V. U.S (1944) the court upheld President Roosevelt’s evacuation and internment as valid exercise of wartime powers. In 1977, during the Vietnam War, The United States brought actions to enjoin publication in the New York Times and in the Washington Post of certain classified material, had not met the “heavy” burden of showing justification for the enforcement of such a prior restraint. The Case New York Times Co. v. U.S (1971), the president’s emergency power violated the First Amendment. In 1979 Iranians invaded the American Embassy in Iran and took a few diplomats hostages. President Carter froze all Iranian Assets in the United States. The case Dames & Moore V. Reagan (1981) illustrates how intertwined domestic and foreign interests can be in the exercise of emergency presidential Power. Undoubtedly, it is the fear and fervor surrounding emergency times that allow imposition of laws that infringe civil liberties. But once a judicial opinion rationalizes such an order to show that it conforms to the Constitution, or rather rationalizes the Constitution to show that the Constitution sanctions such an order, the Court for all time has validated the principal of racial discrimination in criminal procedures and of transplanting American Citizens. This principle lies like a loaded weapon ready for the hand of any authority that can bring forward a plausible claim of an urgent need.

Milton@ibt-eft.com

Lauro Muller SC Brasil - Uma cidade prosperando

Uma cidade Prosperando!

Lembro bem quando Lauro Muller tinha a Estrada de Ferro Dona Teresa Christina, que nos levava até Tubarão, ou ate mesmo Capivari, uma cidade mais distante um pouco. Todos utilizavam o trem para fazer compras ou para receber ou enviar encomendas. Era gostoso sentar nos bancos e observar pela janela, com medo as vezes, que o trem caísse no penhasco acima do rio.

Logo veio o progresso, e os automóveis tomaram conta das estradas que, por sua vez, eram construídas para encurtar distancias.

Ah ! Como o trem era importante para a cidade! Não só pelos passageiros, mas pelo transporte de carvão mineral extraído das Minas da empresa de Mineração da Companhia Barro Branco. Este veículo de transporte econômico (barato), como era o trem, viabilizava a extração do carvão em grande quantidade num preço acessível ao Mercado. Lauro Muller então crescia. Na minha época haviam o Cinema e o Cruz de Malta na mesma praça. A cidade era muito aconchegante. Tinha uma pracinha bonita e a maioria dos habitantes trabalhavam na única indústria , ou prestavam serviços aos que trabalhavam na indústria. Era uma população que se conhecia desde a emancipação do município

Numa inesperada noite, em Fevereiro de 1971, uma tremenda chuva que havia iniciado ao anoitecer e não parava mais. A luzes se apagaram, e naquela noite o rio levou consigo o que fazia Lauro Muller se destacar; - A Estrada de Ferro Dona Teresa Christina. Os trilhos foram entortados com a força da água e a ferrovia havia sido parcialmente destruída

Com isso os acionistas, ou donos da empresa de mineração, tiveram que medir se era viável investir em reformar as estradas. Acredito que resolveram consertar as estradas e os estragos da mineração. E a cidade ferida voltou a funcionar meio cambaleando. Até que num piscar de olhos, em uma tarde de 1974, o rio resolve transbordar e levar o que havia sido deixado. Só que desta vez levou consigo uma nova esperança da estrada de ferro ser recuperada.

Depois desta catástrofe, a estrada de ferro perdeu seu valor, e com isso afetou o rendimento da empresa, qual não mais admitia empregados. Os compradores (usuários de carvão) do produto optaram por outros meios de adquirir o que adquiriam de Lauro Muller. Assim uma geração de jovens saíram da cidade em busca de uma vida melhor. Todos voltam pra visitar familiares (e a cidade), mas não podem residir numa cidade que não oferece segurança de sobrevivência

Aí me pergunto! - O que significa o progresso? Será que seria melhor termos em Lauro Muller mais empresas produtoras? Como se consegue fazer Lauro Muller atraente para investidores, ou seja, pessoas que tem dinheiro pra abrir uma fábrica, daquilo que for.

Na minha última visita notei que Lauro Muller está linda. As estradas pavimentadas, a cidade bem organizada. Há uma praça central muito elegante, e as estradas bem sinalizadas. Enquanto eu estava conversando com um amigo, um caminhão de porco passou pelo centro da cidade e o cheiro me fez rir. Ao mesmo tempo que me trouxe memorias passadas, eu achei interessante que ainda existissem essas lembranças. Logo descobri sobre o projeto da nova ponte.

A cidade está prosperando. Depois de ter perdido as pernas em duas enchentes, não e fácil se levantar. Só gostaria de ver mais indústrias. Gostaria de ver estas terras atraentes aos investidores. Gostaria de ver um plano de desenvolvimento com o objetivo de atrair investidores em montar industrias. Sejam elas o que forem. A cidade precisa se desligar do trauma de somente ter uma grande empresa, ou somente um produto. Se isto um dia vier a acontecer; - então Lauro Muller não será a cidade de onde viemos e a qual somente podemos visitar.

Curar a Diverticulite - 2011 by Milton Laene Araujo

Por dois anos eu estava sofrendo de uma dor minuscula no lado esquerdo do abdomem. Ja havia ido ao medico por duas vezes, e ouvia que era musculo ou gases. So que, com o tempo a dor era maior quando eu apertava, como se ela tivesse dizendo que o que quer que seja, ainda estava ali dentro de mim. Eu notava que nao podia apertar o lado esquerdo da barriga. Um dia peguei um livro de anatomia que tenho e notei que nao temos orgaos no lado esquerdo aonde eu sentia dor. Ha visicula que fica bem acima de onde a dor existia.

O tempo passou, ate que em outubro de 2005, veio o Furacao Wilma, aqui em Lake Worth, e naquela mesma noite eu tive uma crise muito forte de dor. Eu corria de um lado pro outro da casa. Foi terrivel, pois ao mesmo tempo em que as portas da casa sentiam a forca do vento, eu estava com medo da dor, nao do furacao. O dia amanheceu e depois de tres Tylenol eu ja estava bom pra levanter.

Os estragos do Furacao foram grandes por toda a redondeza. Um bambuzal que tinhamos no quintal foi derrubado pelo vento.

Ficamos sem energia por mais de duas semanas. Ainda bem que aqui em casa temos um gerador de eletricidade que abastece a casa toda. O gerador funciona a gasolina, e nao havia mais gasolina pela minha area. Os postos nao funcionavam sem eletricidade, e assim era necessario dirigir por duas horas pra comprar gasolina. O pior da viagem e trazer varios galoes em containers de plastico no porta-malas do carro.

Ao lado de minha casa, sempre morou a Ida Johnston, que no ano de 2009, estara completado seus 103 anos de idade. A Ida tem 4 enfermeiras que trabalham com ela ( em turnos ), 24 horas por dia desde seus 85 anos. Ela veio de uma familia muito abonada, e hoje vive com seus investimentos. A Ida e bem conservada e mantem assim sua forma de viver. Ela nao tem TV a cabo nem satellite, e somente recebe os 14 canais com uma antenna, tipo dez elementos, daquelas que usavamos na decada de setenta. Ela esta contente com os canais nacionais que sao oferecidos gratuitamente. Ela le jornais e assiste TV, e conversa eloquentemente sobre qualquer assunto. Sua mente e brilhante, e sua memoria e de ficar abismado. Sempre que posso, e isso acontece em cada 4 meses, visito a Ida. Fico somente uma hora, e converso com ela, e rimos juntos de tudo o que conversamos. As enfermeiras sempre me disseram que tenho a porta aberta pra entrar a hora que eu quizer. E uma pena que nao tenho visitado Ida mais frequentemente.

Umas horas depois do Furacao Wilma de 2005, Ida aos seus 99 anos de didade estava em casa com a sua enfermeira. Elas nao tinham eletricidade, e assim oferecemos a ela uma extensao de nosso gerador, e conectamos o ventilador e um abajur . Isso foi o que ela requestou no momento. No outro dia fui ate a casa dela pra saber como eles estavam se virando com comida e tudo o que precisassem eu percebi que da mesma extensao eletrica que haviamos colocado, a enfermeira havia colocado uma conexao em forma de T num dos terminais pra poder entao ter mais 3 saidas. Com isso ela conectava a geladeira, televisao, dois ventiladores, e mais luzes em outras areas da casa.

Uma vez que comentei ao Jack, ele foi rapidamente a casa de Ida pra dar outra extensao do gerador para que elas usassem com o refrigerador, com medo de que haveria uma alta carga, e consequentemente um incendio.

Ficamos felizes em ajudar a Ida. Ela e uma vizinha muito querida. Veio a todas as festas que tivemos. Ela e muito inteligente e gosta de conversar sobre ideias. Nunca ouvimos a Ida falar de alguma pessoa. Ela ate hoje faz palavras cruzadas do jornal diario, e ate joga carreira com uma enfermeira selecionada pra ver quem termina primeiro.. A Ida sempre ganha. Quando a eletricidade foi consertada e a vida voltou ao normal, Ida nos enviou um cheque de cinquenta dolares pra pagar a gasolina. Na verdade o que ela usou custaria menos de vinte dolares.

Ha dois anos atras, isso por volta de 2007, Ida foi parar no hospital. Ela sentia dor na perna, e nao sentia a existencia dos seus proprios pes. Como resultado, tiveram que amputar a perna esquerda dela. Havia uma coagulacao permanente, e a veia parecia ter se rompido ali. Algo terrivel, pois ela estava sempre com aquele pe enfaixado e nada se via. Porem, no hospital, ela ja estava sem a metade da perna quando nos a vimos. Ao ver-nos ela comecou a chorar. Foi triste, pois ela estava sofrendo. A enfermeira da Ida nos chamou e disse que havia negligencia por parte dos medicos. Ficamos impressionados com a historia dela, mas aprendemos depois que ela nao havia tomado conta de Ida como deveria, e que muitos medicamentos nao foram dados. No final esta enfermeira foi despedida. Um mes depois a Ida ja estava perfeita. Em sua caderia de roda, ela visita os amigos e se sente muito bem. Infelizmente, ela nao pode caminhar, ela teve o banheiro preparado para poder se movimentar em sua cadeira de rodas.

Uma semana depois do furacao, ainda sem energia, havia um posto medico em frente ao hospital tratando todas as pessoas que ali passavam. Tudo de graca. Eu entao fui la e fui atendido por uma medica jovem, muito interessante, que veio do Norte. Eu perguntei a ela se ela havia se voluntariado a esta obra ou se ela havia sido escolhida. Ela disse que ja trabalha ha muito tempo com a Salvation Army, e doa este tempo como medica porque faz ela se sentir bem. Ela me diagnosticou com diverticulite. Ela desenhou numa folha de papel o intestino, e tambem as tripas, e mostrou que eu tinha uma bolsinha ou varias no meu intestino, e que se eu comesse sementes, eu deixaria elas depositadas nestas bolsinhas, e acabaria tendo uma infeccao. Ela estava admirada por eu ter uma doenca que aos 65-70 anos de idade era mais comum. Ela receitou antibioticos e em duas semana eu estava bom. Nem terminei os medicamentos.

Tres meses depois a dor voltou e, eu fiquei em casa. Tomei o resto dos antibioticos, e muitos Tylenols e me senti melhor.

Em 2006 fui parar no hospital. Estava com uma infeccao grande, pois a dor era muito forte, e nao consegui manter alimentos em meu estomago. Fui ate a emergencia, e somente fui atendido 4 horas depois de estar la, eperando e com dor. Uma vez atendido fui medicado e hospitalizado, e depois de uma ressonancia magnetica, foi visto que eu tinha uma infeccao grande, e que deveria ser operado.

Eu queria ser operado, a principio, pois nao tenho medo da medicina de hoje em dia. Mas ja sabia atravez de amigos que nao se opera ninguem com infeccao. Percebi que havia conflitos de interesses entre os dois medicos. A Minha medica, qual tenho por 15 anos, veio me ver e disse que eu tinha que curar a infeccao antes de ser operado, e que talves nem fosse necessario operar. O medico que ia efetuar a operacao queria que eu operasse naquela hora. Eu decidi nao operar, pois ainda estava infeccionado, e optei por curar a infeccao com antibioticos, morphina e alimentacao intra-vein, por cinco dias enquando no hospital.. Tudo isso foi receitado pela minha medica, pois ela que estava de frente ao meu tratamento – Nada oral, nem agua. So uma jarra com gelos triturados pra molhar a lingua. E assim passei os dias sem comer nada, sem mais sentir dor, mas recebendo todos os nutrients que faltavam em meu ogranismo, de forma dosada.

Uma vez hospitalizado, eu nao sentia nenhuma dor. Estava com muita fome, e nao aguentava mais ver comerciais de comida na TV. Queria sair do hospital e voltar pra casa. A cada dia, demanha, Eu recebia visitas dos dois medicos. No Segundo dia que eu pude andar, ja sem dor, e sem necessidade de tomar medicamnetos para dor eu caminhava levando comigo um tripee ambulante qual suportava 3 sacos de soros liquidos que eu recebia continuamente. Minhas caminhadas eram mais por expeculacao. Eu ja estava sem dor, e estava sendo medicado, podendo dar um descanso ao meu intestino, de nao precisar digerir mais nada. Assim, via TV o tempo todo, dormia bem, e nao recebia nenhum alimento. Recebi varias visitas de amigos, mas o que sempre esteve la foi o Jack.

Os exams eram feitos diariamente, e as vezes se repetiam, e me faltou potassio no organismo. Eu acho que foi por eu ter vomitado muito antes de ser admitido no hospital.

No quarto dia, minha medica veio me ver e disse que eu estava com uma boa aparencia, e que meus exames vieam perfeitos. Ela disse que eu ja podia ir pra casa naquele dia na hora do almoco. Ela ja havia assinado os papeis, e eu estava livre. Ela entao saiu do quarto e eu fui tomar banho. Claro, ainda conectado com os medicamentos. Depois me arrumei, e coloquei minhas coisas na bolsa e esperei pelo cirurgiao para que me desse alta. Descobri naquela hora que os dois precisavam me dar alta.

O cirurgiao veio e disse que nao ia me dar alta porque eu ja estava pronto pra ser operado. Por motivo de forca maior, eu decici dizer para o sirurgiao que eu estava muito fraco e queria sair, comer e me sentir melhor pra operacao. Ele disse que preferiria que eu ficasse ate o outro dia, para ele fazer mais exames. Eu entao disse que nao podia ficar ausente de minha vida profissional, e que precisava organizar minha vida antes de vir pra operacao, e que eu estava me sentindo bem, e com muita fome. Na hora eu perguntei por que os canais que o hospital tem mostra comerciais de comida o tempo todo? Ele nao respondeu. Ai eu falei que nao queria ser operado agora, e que a minha medica primaria ja havia me dado alta, e eu so estava esperando por ele pra assinar.

Ele me fez prometer que eu voltaria em duas semanas pra ser operado, e ate deixou o cartao para eu marcar a operacao.

Ate hoje (2009) nao voltei. E com este artigo quero somente dizer que nao tenho dor e que minha diverticulite esta quieta. O que fez melhorar foi ficar em repouso no hospital por quatro dias sem ter alimentacao alguma. Isso deu um descanso ao intestino inteiro, e os medicamentos puderam fazer a sua parte. O meu erro foi nao tomar os antibioticos todos quando eles foram receitados pela medica voluntaria, e posteriormente pela minha medica.

Hoje, como um portador de diverticulite, recomendo a quem quer que sofra da mesma doenca, que procure um medico pra fazer o exame, e se obter o antibiotico chamado – “metronizadole”.Tome todos e siga as instrucoes medicas, e coma levemente pra dar um descanso ao intestino. E importante dar este repouso porque o antibiotico e muito forte. Se voce tomar os antibioticos nos horarios certos, pelo tempo determinado pelo medico, voce conseguira combater somente 50% da infeccao. Durante o tratamento, voce precisa se alimentar com muito liquido, soupas de galinha, saladas, e coisas cruas, que se auto digerem, pois voce precisa fazer com que o intestino nao trabalhe, puxando e levando nada pesado para baixo.

Se voce nao seguir os conselhos medicos, e nao tomar os medicamentos nos horarios marcados, pelo tempo marcado, voce estara sujeito a ter que ser operado –

Hoje e dia 16 de Outubro de 2011 eu deparei com este relato sobre diverticuliti no arquivo do meu computador. Quando eu escrevi tive a intencao de deixar claro que o unico tratamento vem acompanhado de 4 dias em repouso tomando soros e antibioticos, e dando descanso ao aparelho digestivo completamente.

Uma vez curado, voce estara curado por muito tempo. Eu, ate entao nao tive nenhuma crise desde 2006. Nao me submeti a operacao porque os danos da operacao podem ser graves. Se voce for diagnosticado, peca os antibioticos imediatamente, e de um descanso em sua alimentacao.

Desde o ultimo furacao de 2005 nao tivemos nenhum furacao nesta area da Florida. I Ida faleceu em 2010 aos 103 anos de idade.

Eu como tudo o que tem sementes, embora tenha sido avisado pra fazer o contrario. Recentemente minha amiga Solange foi diagnosticada. Eu disse a ela como tratar, e dei uns antibioticos que eu tinha, pois e muito caro pra quem nao tem seguro medico. Solange foi emfermeira no Brasil, e quando ela me visitou no hospital em 2006, eu comentei que na noite anterior, enquanto eu recebia potassio atravez de soro, eu comecei a me sentir mal, e uma coceira interna no peito estava me deixando desconfortavel. Quando isto aconteceu eu chamei a enfermeira e ela diminuiu as gotinhas de potassio, e a agonia havia ido embora. Solange entao me disse que potassio e perigoso e pode matar um individuo sem deixar tracos. Naquele momento eu fiquei pasmo. Meu Deus, eu poderia morrer com um excesso de potassio entrando no organismo num curto periodo de tempo. Ela disse que algumas horas depois o potassio tambem se mixture no organismo e mesmo uma dosagem letal nao deixaria marcas. O que mata mesmo e a velocidade qual o potassio entra no organismo, e nao a quantidade que voce consume.

Pra finalizar, quero dizer que diverticulite virou moda hoje em dia. Esta doenca matou Tancredo Neves em 1985, porem hoje em dia esta muito comum. Como se alguns alimentos sao fabricados com o proposito de criar diverticulos no colen, pessoas de todas as idades estao sofrendo – A dor e tao forte que eu comparo com uma dor de pedra nos rins.

UPDATE
April 27, 2013 - Ate entao nao tive nenhuma reacao - Quero dizer que os dois medicamentos atuais que funcionam pra curar a diverticulite sao os seguintes: METRONIDAZOLE 500 MG e SULFAMETHOXAZOLE-TMP DS TABLET - Usados juntos, com muita soupa de galinha (so o caldo) vai dar ao intestino um descanso e o medicamento vai agir - nao pode nem imaginar em beber alcohol com isso. Vomita na hora, perde potassio, e ai vira bagunca. Um abraco - Milton

UPDATE
July 2014 - Ate entao estou comendo de tudo - ate amendoin. Os medicamentos acima nao tomo ja tem mais de 5 anos e nenhuma reacao ate entao. Se voce curar com um descanso total em seu intestine, voce tera condicoes de ficar curado. Agradeco a DEus por isso e agora divide com voce. Um abraco, Milton

Milton Laene Araujo

Milton@ibt-eft.com

10/11/11

Suicide is not the answer. Teen Issues 2011 by Milton Laene Araujo

Suicide is not the answer.

People in general have suicidal thoughts at some point. And teens who take a step farther, in an attempt to actually kill themselves, feel like they want to die, but at the same time, many of them are happy when they discover that there are people who want to help them overcome their issues.

There are some factors that can make suicide seem a more desirable option for some people.

Family history. This can include a family history of suicide, mental disorders, and/or substance (drug or alcohol) abuse.

Drug abuse - alcohol abuse.

Abuse - mental, emotional, physical or sexual

Mental, emotional or physical disorders.

Depression is a major factor, and it means that a teenager has feelings, thoughts and stresses that he or she cannot handle any more. They try to solve the problem by killing themselves.

Tempting suicide is not confined to any age, gender, social or economic group. In any case it is a cry for help.

Some signs...Here are some of the things to look for:

Disinterest in favorite extracurricular activities
Problems at work and losing interest in a job
Substance abuse, including alcohol and drug (illegal and legal drugs) use
Behavioral problems
Withdrawing from family and friends
Sleep changes
Changes in eating habits
Begins to neglect hygiene and other matters of personal appearance
Hard time concentrating and paying attention
Loss of interest in schoolwork
Risk taking behaviors
Complains more frequently of boredom
Does not respond as before to praise

When human beings commit suicide they destroy many other lives. They have no sense of hope, and they have lost empathy for self, therefore, for everyone they know.

People in general - not only teens - have suicidal thoughts. Life is not easy!
Most people (in general) have an inner desire to stay alive, to fight for life.

Animals in general - give up living only when they are physically sick (ill).

Suicide is not the answer because taking your own life is a coward act against the nature of our own construction.

Travel with me in this scenery:

Imagine yourself looking up in the sky and see an explosion very far away, what we call supernova, or a creation of a star. With this explosion many different atoms mix up with others existent in its surroundings and a new element is formed.

From that perspective, imagine an explosion that happened before, The Big Bang - when all matters neutralized each other into energy, and emptiness was present, except for one single atom.
There was a time in the past when things started to vanish in nature. Trees and cars and cities and rivers were being destroyed by force of nature or wind, and matter became powder, and powder became atoms who separating from its neighbors became self. The combination of Hydrogen and Oxygen creates water. Something we have in abundance on earth. Now imagine the opposite starting to happen. Where there was water becomes dry, and with more hydrogen in the atmosphere, and more Oxygen trigger fire, and other elements to become gas or energy, giving life to one single strong atom called nothingness, for it is the mixture of all there is. So things were transforming and turning into the atom of nothingness, which is a correct combination of major elements found on earth that makes itself invisible, but when combined with another brings a vacuum where if anything penetrates into that vacuum it would become nothing, yet. it would just increase the atom of nothingness, which is a combination of everything there is, yet invisible, and we call it black hole.

Simulated view of a black hole in front of the Large Magellanic Cloud. The ratio between the black hole Schwarzschild radius and the observer distance to it is 1:9. Of note is the gravitational lensing effect known as an Einstein ring, which produces a set of two fairly bright and large but highly distorted images of the Cloud as compared to its actual angular size.

General relativity
Introduction Mathematical formulation Resources
Fundamental concepts[show] Special relativity Equivalence principle World line · Riemannian geometry
Phenomena[hide] Kepler problem · Lenses · Waves Frame-dragging · Geodetic effect Event horizon · Singularity Black hole
Equations[show] Linearized Gravity Post-Newtonian formalism Einstein field equations Geodesic equation Friedmann equations ADM formalism BSSN formalism
Advanced theories[show] Kaluza–Klein Quantum gravity
Solutions [show] Schwarzschild Reissner–Nordström · Gödel Kerr · Kerr–Newman Kasner · Taub-NUT · Milne · Robertson–Walker pp-wave · van Stockum dust
Scientists[show] Einstein · Minkowski · Eddington Lemaître · Schwarzschild Robertson · Kerr · Friedman Chandrasekhar · Hawking others
v · d · e

A black hole is a region of spacetime from which nothing, not even light, can escape.^[1]

like a mixture of so many types of atoms that when in fusion create others able to deteriorate the entire system into a piece of self.

Life is the breath of air that we inhale every day to feed our longs into sending oxygen to our blood stream. Many animals and plants use the same system. They need air to maintain themselves alive.

Imagine yourself looking at the earth from a far distance, and a man made small robot was capable of feeding itself with silica. A chemical compound that is the main constituent of most of the Earth's rocks. Silica occurs naturally in five crystalline forms (quartz, tridymite, cristobalite, coesite, and stishovite), in a cryptocrystalline form (chalcedony), and in an amorphous form (opal). It is also the main chemical compound in sand. Silica is used to make glass, concrete, and other materials. Also called silicon dioxide. Chemical formula: SiO _{2 .}This robot was equipped with a computer that could take silica from the earth, and with its combination was able to auto reproduce. This way, a small robot the size of a bee flying on the earth and landing in the Andes would start to devour the entire mountain while eating and multiplying. Like bacterias.

Now imagine yourself in today's Universe, where galaxies are formed, super nova happening every day, the universe expanding, more elements being discovered, besides hidrogyn, and a mixture of hidrogyn and other gases that only appear when there is a supernova, such as lithium, necessary for gun powder.

Man today is capable of mixing up elements and create explosions. Men take a mixture of atoms and mix it with others for when in contact with air we breathe can create the biggest explosion. It multiplies itself into fire, or radiation and wind with massive power all in one single atom, that multiply too fast. It can destroy an entire city to rubble. Today every country wants to have these types of protection from others. We are living in an atomic era.

Getting back to our imagination, During the bang, the conglomeration of elements and the change in temperature made them solid, and they tended to group with others forming a mass, and this way our earth was formed. Many elements behave differently in high temperature. Solids usually become liquid or gas, and when the temperature cools down, they solidify and are grouped in a different way from when they started, for example, in the center of the earth we have Nickel and Iron and it has not yet cooled down completely. These elements are concentrated in the center for being heavier, and any mass in the universe has it own gravity to be able to stay afloat. The combination of gravity pulling towards itself anything nearby and the elements floating, the heavier ones will be deeper down, like particles in a glass of water floating and little by little found a ground to stay, and conglomeration of elements, in areas where we find iron, on a surfice we can find other elements that could only be created if they were grouped nearby and used the temperature change of the earth to form themselves, such as copper, gold, diamond, etc, etc.,

OK, now that we visited the formation of the earth, and somehow our existence, by being a mixture of atoms, such as carbon in our veins, hydrogen in our water etc etc, we can have a sense that we are a combination of these elements, and we need to eat these elements to keep ourselves alive. We know that nothingness exist and it is growing - and whatever is near will be diluted, but at the same time completeness has not achieved its climax. There are far away new mixtures appearing, new stars being born and the age of the universe, in despite of the black hole growing, is far away from being engulfed again into an atom of nothingness. So, we will exist for a long time, unless we commit suicide, and this is the reason for this entire conversation.

As human beings we have the clarity of communicating and sharing experiences with one another. We do not need to experience everything in life to discover what is good and what is right. We have the capability of reasoning about what to do. We learn from TV shows, programs, books, essays or even a blog like mine, which is never proof-read. Our friends go through trouble, our non friends go through the same things. We lack desire to fight because we became lazy. We want things to be resolved, but we do nothing to counteract the problem.

In a world where we have a government to create laws to protect every human being, and make every person count, we need to be organized and accept that we are transformation and evolution that now need to live into a society.

We fought against billions of sperm-a-tozoids to fecundate an egg. We are now part in the journey of existence. Not one person, nor any mixture of atoms can make us change the certainty that we think, therefore we exist.

What exactly takes people to commit suicide is the sickness of others, which can be overpowering, making some of them see themselves not fit for whatever group or society they belong. But the most important factor is FEAR. Smewhere, sometime, someone implanted this seed, or energy into pople's head, and when they can not see beyond it, they may opt to suicide. Fear of rejection, fear of acceptance, fear of ... Some can not even face a heart-break. Others want to make a relationship work, but prefer to leave and make the others suffers. In any sense, suicide is the worse thing a woman being can do to others, and to society. It is a cry for help that doesn't need to end in death. IT IS A CRY FOR HELP -

If you ever thought about killing yourself, please just remember that it is normal to think about it in a non-thinking moment, for if we balance life and death, life is better. We thing, therefore we exist. There are various groups that can help you to overcome whatever feelings you have. Suicide is not the answer to anything because you burn the light bulb inside of you before it could energise the world with its transformation and presence. Eliminating yourself will simply cease your continuation and the desire to fight for whatever you are fighting for, and it will make you like good-for-nothing in your casue. When dead, your powder will contribute to the energy of nothingness, and wait for another big bang to come back again, for you violated the most sacred thing - "LIFE WITH CAPABILITY OF REASONING".

Everyone alive has a moment to die, and this moment is sacred between that person and its source of wisdom and energy. The reality is: We all kill ourselves in the end. We all commit suicide one way or another. A person that smokes is killing thyself a little bit each day, instead of taking it all at once. The air we breath and the contamination created by men has diminished many lives with diseases etc. Yet, it is not a motive to cease living at once. We have a reason to be here, although not revealed to many, we all are important in this existence. Make the best you can and share knowledge to induce others to have an objective in life. Life without objective drives a person to depression, and then suicide. Make yourself important, be good in something, for only the good ones will become important. Learn about what is going on right now - Solar panels, computer industry, made in USA products - Be an advocate for a cause. Stop feeling sorry for yourself and blaming the world. You do not have to go to prison to value freedom.

Now, if you had a person in your family who commited suicide, please, understand that I am writig for all of us who sometimes consider doing it. I want to bring some life, and some desire to consider life.

What I am saying is, when a person commits suicide she leaves behind many people in sorrow, and depressed, and afraid of life, sometimes ready to check out as well, if not oriented.

The left family family members suffer, brothers are discriminated for being a part of a family that took the short cut in life. Many people will be cruel to a family where suicide took place. Sometimes just by knowing that a family member has these types of roots, a wedding may be cancelled and life itself turnes up-side down. People associate it with mental disorder, instead of any other factor. So, it is terrible to let your friends down, your family, your school when you are contemplating on it.

Now, if you have a person in your famiily who committed suicide, remember that a human being responds to pressure differently. A car tire, when full with air, compressed into a small space, creates pressure, yet it responds accordingly to the road by keeping the weight of the car balanced. A person reacts differently to pressure. Althought, it has more to do with fear, pressure is an emotional feeling that makes the entire brain chemestry to become volatile. Mood goes up and down, and when down a variety of thoughts and actions may take place.It is no one's fault. A human being in its right mind would not do such a thing, for it is the way life is. A tree bents and make turns to have a space in the sun. When a human being takes his or her own life, it could have simply be their time.

When contemplating suicide, face the problem, open your mouth, let someone know that you have these thoughts. Make a friend! After that make 2 friends. Be honest and be yourself and you will see life better. Call your mother - who gave you life. Is it the present you want to give her? It is not the solution

- Milton Laene Araujo
Milton@ibt-eft.com

10/09/11

About life in general By Milton L. Araujo: Texting and killing - Teen issues 2011 - by Milton Laene Araujo

Texting and killing - Teen issues 2011 - by Milton Laene Araujo

The Internet was commercialized in the 1990s and became an international network due to its popularization and its incorporation into virtually every aspect of modern human life. Coincidentally, at the same time cell phones emerged. Instant messaging became popular and so did texting, which refers to the exchange of brief written text messages between fixed-line phone or mobile phone and fixed or portable devices over a network.

Teens are text messaging at least forty times per day. Today, text messaging has been extended to include messages containing image, video, and sound content, therefore becoming a lethal weapon, and a necessary evil. Defamation, also known as libel is the communication of a written statement that makes a claim, expressly stated or implied to be factual, that may give an individual a negative image. Teens are sharing innuendos and defamation on twitter, also, sharing pictures of themselves nude, event worse, videos or anything of self risk.

Teenagers retaliate to groundless criticism with more vehemency.

Just recently, a teenager boy, 18 was arrested for making threats to his girlfriend via texting. After being bailed out of jail, he went back to his high school and killed his girlfriend, 17.

It has become common for teens to " text their anger away" to whom and where they may. This is not only a teen problem, for it also includes parents of teens who are not up to date with technology, and parents and teens who experience the same technology advance. When parents lack Internet knowledge, teens are free to do whatever they want. When parents are aware of technology, both parents and children get wrapped up into all novelties of technology.

We are living in a society of selfishness. Families are broken and the lack of togetherness has battered the population.

Teens are learning everything virtually.

Internet laws are still trying to mature and gain shape. Whenever we are focusing on one hand-held device, and writing with the other hand, we are ready to ventilate.

Both parents and teens are NOT in fault today but both need the same schooling, however, this school is in transition, or cannot keep up with technology. Schools of disciplining, and good manners is available online, but doesn't fit with with this change we are about to face.

In the near future schools - or a building for students to meet - will be available, but all classes will be virtual, therefore many will choose to take classes at home. More room for texting -. Classes will be pre-recorded, and teaching will become a marketing for the fit.

How does one know the damages a text message can cause to another human being? Kids can be very cruel at times. Texting is a weapon that should be used to share information, and NOT to ventilate agony. But teens do it. People use texting to ventilate - or to promote themselves, like celebrities who text and share their whereabouts. This is a tool for a stalker. Yet, celebrities always want to share where they are, what they ate, etc. This is bad. People in general, (This year 2011), share via twitter wherever they are doing - I checked on the word bath just to check what was happening, and most of the people said that they were going to take a bath and go to wherever they were going. This is crazy, for any stalker or killer simply need to follow your messages...
Another teen caused brain damage to a classmate after she texted something related to his brother's suicide. He reacted to his emotions, and did not think. Like texting - no need to think - whatever comes to mind can go there now!

When we refer to High Schools, they need a cell-phone tower as part of their building. This way any call will be connected with this same tower and communication will be controlled and semi-restricted.

Be careful if you are a teenager. Do not send "hating" text messages, for it can be the only thing the other person may have from you. Written word is immortal, and when used to defame, it can be hard and costly to repair. Be careful if you are a parent. Anything posted in any social media will stay there, and when one human being is exposed by others in a negative manner to the entire world, it is something we have no idea how disturbing can be. In this texting era, where grammar lost its power, and words became a gizmo of letters or abbreviations, is hard to let go off the past, It is hard to embrace an era where words get distorted, and start to live today.

Now we are collecting the fruit of what we planted in our society. It is an almost lost harvest. We can prepare for the next harvest by teaching moral examples to our kids and the truthfulness in the sentence " Treat others as you would like to be treated". Do not text hate messages. to anyone .

Milton Laene Araujo
Milton@ibt-eft.com

10/03/11

Gay issues 2011 - By Milton Laene Araujo

About life in general By Milton L. Araujo: Gay issues 2011 - By Milton Laene Araujo

From me to you!

This blog contains a variety of articles. This blog doesn't refer to news, therefore its posting date could be any-time. No attention was paid to the "art of writing", for its first intention is to share a thought, an idea. Sometimes we refrain of sharing what we know because we get entangled with the grammar or sentencing structure. I will eventually go back to my posts and correct it. What I learned while writing, is that if I go back, I will change a paragraph or a sentence, and eventually delete the whole thing altogether.

About Me - Milton Laene Araujo

10/25/11

INDEX

CHAPTER 1

SPECULATION ON FUTURES –

SHORT AND LONG A FUTURE CONTRACT

Let’s first examine the long position.

Picture this scenery:

Today is September 1st, and you (as an speculator), have an opinion that the price of Crude oil is going to move higher before the month of November. You go long the contract. What actually happened?

You are making a promise to do something in the future. You are promising to take delivery of 1000 barrels of oil in November, and pay $73 per barrel or $73,000.

Now, assume that by September 25th the current price of the NOV CRUDE OIL CONTRACT price is at $81 per barrel. You believe this price is a high as it will go, and decide to SELL your contract. If you get $81 on the sale, you are now rid of your agreement with the following results.

1.2 SPECULATION PROBLEMS – How to solve them

$ 97.00 Per ton Gain (gross)

X 10 Contract size = 10 metric tons

$ 970.00 Profit per contract GROSS

- 65.00 Commission

$ 905.00 Profit per contract NET

X 2 Number of contracts

$1,810.00 Net profit on the trade

LIGHT 2 – SPECULATION

Example 2:

Sell .83275

Buys .81525

Sell 9278 - Note that the decimal vanished and we have points

Buys 9175

Long Term Financials considered years:

Example 4: – Long Term

Sell 98-14/32 - Note that we have a dash

Buys 96-18/32

PROBLEMS – SPECULATING FUTURES AND MARGIN

10/23/11

10/22/11

10/17/11

10/16/11

10/11/11

10/09/11

10/03/11

Today is September 1^st, and you (as an speculator), have an opinion that the price of Crude oil is going to move higher before the month of November. You go long the contract. What actually happened?

Now, assume that by September 25^th the current price of the NOV CRUDE OIL CONTRACT price is at $81 per barrel. You believe this price is a high as it will go, and decide to SELL your contract. If you get $81 on the sale, you are now rid of your agreement with the following results.