About Me - Milton Laene Araujo

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Lake Worth, Florida, United States
My name is Milton and I am a reader. I love to feed my mind with what if’s?, through stories.

8/08/13

The Commodity Broker Chapter 4 -

The Commodity Broker Chapter 4 -
By, Milton Laene Araujo


Chapter 4 – One week later

 

Things were changing in a very fast pace for Sofia. One day after the arrival of Mr. Jenkins account information, along with a check for $40,000 Paul couldn’t be happier with the results. He called Sofia aside to have a chat.

“I want to talk with you”

“OK.  Go ahead”

“No, not in here, follow me… I prefer to talk with you in this room because no one can hear us”

“OK…did I do anything wrong?”

“Gosh .No… You are doing a great job. I just wanted to hand you this cash in appreciation for your performance. You are very good. Chad said that you are the best on the phone. I don’t want you to be in the small room anymore… Diva is still learning, Victor doesn’t have any discipline, or he is just not interested.  I cannot fire him because he just got his license, but I think he just works for his $300 weekly check. They are a fine crew, don’t get me wrong, but I just think that you surpass them, and I don’t want them to influence you, or affect you in any ways.”

“Geez…This is so cool Paul …I was broke. This will help Jackie and I to pay for the mortgage installment. She has been taking this burden by herself for so long.”

“You do not have to worry about money Sofia…Ever…You will make tons of money here, besides, everybody likes you!” Is there anything I can do to help you?

“I have to work hard and make calls…and I am having some problems with a few prospects’”

“What type of problem? You can always tell me, I am here to help you”

“I sense that they do not have the money to invest, but it sounds too good for them and they want to get involved.”

“What is wrong with that?” …what is wrong with that...Who needs to know…And here I go! Again and again…

“Well, Nothing really, but they can’t afford the risk and I don’t want to take food off their tables, just because I have a recommendation and they believe me…I sometimes wonder if I believe it.”

“That’s why you have to qualify them first Sofia.”

“I know… I know… I prefer to get their attention first and then dig into their financial situation”.

“Well, that explains it… But I prefer that you have five millionaire clients fifty 5K type. Those cheap bastards just bring trouble…Oh, before I forget…let me show you your new office...You can move anytime…This evening, there is.”

The office was magnificent. There was an “L” shape mahogany desk in the corner bellow the window with view to the Atlantic Ocean, instead of Atlantic Boulevard, a leather chair that enveloped an entire body. It was state of the art. It could be locked from inside. A set of key was handed to Sofia.

“This is very nice Paul”

I know… This office was in dispute between Peter and Steve. They both wanted to move in here, but I decided to let them where they are. When things are good we don’t change. Well, this is for you.”

“I wonder why you have chairs, considering that you do not like anyone to be seated”

“Don’t be funny Sophia! It is true…I think …I know for a fact, that when you are standing your voice comes out better that when you are seated. I mean everybody’s. As you can see, everyone is walking all over this floor while talking on their phone. You don’t see anyone sitting and talking…well, except for Victor, but he is a child.”

“Yes, I met Victor. He is a sweet guy…how old is he anyway?”

“He just turned 19. He is a high school dropout”

“How did he pass the test?”

“He was lucky! Cindy said that he wouldn’t pass the test. She was his tutor…but then again…Cindy said that Diva wouldn’t ever pass the test and she passed on her first trial.”

“Hum…what does she know?”

“True…Sofia…Patrick said that you were a waste of time. I almost got rid of you last week.”

“Patrick said that? Geez…I was working with him for only one day…my first day actually, and he seemed to be so nice! I little weird, but nice!”

“Yeah… He is no longer here. He left…Patrick is that type of broker who works in every company he can lay a job. After his zero production is recognized he either leaves or he gets fired. This time he left on his own will.”

“Wow.”

“OK Sofia, at night you move in. Let’s get back to work”.

 

Sofia left her office ‘to be’ and walked through the entire third floor observing everything. It was her first complete glance into the office. She only knew the conference room, the big lounge where no one ever used, but it was there, in case some unexpected visit from regulators submerged before Paul was informed by his contacts. She got $1000 bonus and it was not even Christmas. She couldn’t wait to get home and tell Jackie. She would get home at 9:00PM. Enough time to have a martini with Jackie to celebrate the day.

“Chad…thanks so much for making that room so elegant for me. I see that it had your prints all over it. New pictures, more monitors than I can use and even a private telephone line. I didn’t see any recording device in there. Did you forget it?”

“No Sofia, We only used the tape recorder once, after Patrick left and said that you were not good!”

“Thanks for sharing it with me Chad, but Paul already said that.”

“Really?... He rarely talks with anyone in here. Maybe he likes you!”

Please, tell him to keep his expectation down to zero. He is not MT.”

“What is MT Sophia?”                                              

“My type.”

 

Diva was walking around, talking on her phone with her British accent… louder now that she saw Sofia.

“You are telling me that you are busy Mrs. Lip sheet? We are all bloody busy aren’t we?...Why don’t you go to hell…”

“DIVA… what are you saying?”

“He, he,he, he…I was just kidding…I have no one on the line”

“Gosh Diva, you sound like me when I get mad.”

“What happened? I mean, what Paul wanted with you?”

“My body”

“What body…he, he, he…you don’t have one, plus everyone said that you play on another team

“You are a witch, you know?”

“He,he,he…you are so estupida!

“Paul wanted to talk with me, tell me how much he loves me and how much he wants me, but he knows that I am a woman of only one woman, so he told me that he will be my second choice.”

“Come on Sofi ! He, he, he…Don’t make me laugh or I will pee on my panties.”

“You don’t have one, remember. I kept it last night.”

“Stop… I can’t take it anymore… I wanted to make you laugh, and look at me…I am a mess…He,he.he. You are so funny!

“Paul wanted to give me money and tell me that I got a new office. The empty one on the corner.”

“Money?...Office?”

“Yes, he told me to stay away from all of you in this room. He said that I need only positive energy.”

“He said all that?”

“No, silly. Well, not the way I am saying, but he wants me to concentrate on my calls, have enough equipment to guide customers to sites…I guess, he wants me all for himself.”

“Paul has a sweet side on him.”

“Are you in love with him Diva? I mean, have you guys…? I have noticed that you come to work dressed so nicely, especially lately! What is going on between you two?”

“Last Wednesday, when we all went out for a drink, and you declined the invitation, remember? Well, we all went to Pauls’ apartment for a drink

“How is it? Is it big? Where is it?

“It is very nice. Small, It is only one big room with a bed on one corner and the bathroom nearby…A large kitchen and a gigantic living area.”

“I suppose you enjoyed the bed part of it.”

“Yes, he was so gentle!  We made love passionately! He talked with me. He treated me so well.”

“But Diva, I heard he has a girlfriend. She works at Nordstrom, in the Gardens Mall.”

“I know, but he doesn’t love her”                    

“I can’t believe you went to bed with him already…Don’t you know that you cannot go to bed with your boss? I mean, this is crazy. How can you conciliate working and dating the boss?”

“I didn’t think about that yet! But I waited until he got rid on Cindy and I went back to his apartment the same night. He knew I was coming back. The way he looked at me. But that Cindy bitch didn’t leave him alone. I hate her, and she is so ugly!”

“Let’s stop all this Diva…Let’s talk later. Let’s go to the gym after here. I pay.”

“Silly…Paul has already paid everyone’s membership…Look Chad is coming…Just pretend you are on the phone… and keep walking. No one will know the difference.”


 

Chapter  1  http://miltonlaenearaujo.blogspot.com/2013/08/the-commodity-broker-chapter-1.html

Chapter 2  http://miltonlaenearaujo.blogspot.com/2013/08/the-commodity-broker-chapter-2.html






 

The Commodity Broker - Chapter 3

The Commodity Broker By Milton Laene Araujo
Chapter 3 -


Chapter 3 –

The call to Mr. Jenkins was a mess! Sofia followed instructions but the customer did not buy it! Meanwhile, Paul Jalil was walking all over the place, trying to find a way to reprimand Sofia for not passing the call to another broker.

During this call to Mr. Jenkins, the entire crew in the office stopped working for a few minutes to hear the conversation Sofia had with Mr. Jenkins. The speaker phone was on.

Jose Roberto Jalil, the owner of Stonegate Financial Services wanted to interfere or even pass the call to a senior broker. He was certain that Sofia would lose that prospect.  But when he approached her, during the call, he made many faces and movements telling Sofia to place the client on hold, but she ignored him completely.

“Sofia, I was right here by your side, asking you to place the call on hold, why didn’t you do it?”

“I am sorry Jose Roberto, but when I am on the phone I ignore everyone and everything.”

“That is not good Sofia. We work as a team here, and one helps the other”

“I thought I had control of that call.” Sofia said. .
 
“But you didn’t! He is gone, isn’t he?”
“Please, take it easy Roberto. Mr. Jenkins was about to have lunch. We didn’t finish our conversation because his wife was calling him. I heard her on the background, besides he will call me back, and if he doesn’t, he is not interested.”
“Sofia, no one calls anyone back”. Haven’t you learned your rebuttals? I guess we need to place you on training. I am going to ask Chad to supervise every call you make.
It was lunch hour. The secretary ordered Italian food for everyone. The buffet was at the conference room. There were breads, Tortellini with white and red sauce, Chicken-lettuce –and-tomatoes wraps, antipasto salad and garden salad. Everyone got their customary seats. Sofia was on her desk checking the NFA web site when Diva Arrived.
“Hi Sofi, let’s grab something to eat. The meeting is about to start and you know how Paul gets when someone is missing”.
“I know. I am preparing myself to be chewed up again.”
“Don’t stress over it. Paul is sort of bi-polar, a good looking one, so I don’t listen to him, I just look at him.”
“Then, let’s go.” 
One thing human and good about Paul is that he provides food to all employees during lunch and dinner.  No one needs to go out of the office, and lunch was limited to half an hour, which included a meeting while everyone ate and a sermon from his Paul whenever he felt like talking his elbow off. His reason is simple. Keep the entire force inside the office, for it is cheaper.
“Lunch has been served.”  Said Paul and went on and one while holding a microphone.
“You can eat a quick lunch between 12-12:30 pm. No eating at any other time during working hours. Be positive at all times and always respect your co-workers, clients and yourself. Maintain a high-energy level. Stand up! Be passionate with your words, and don’t worry, we will have lots of Red Bull, caffeine and Ephedra. Remember the program! We only sell energy options Long. Make sure to complete your prospect sheet with all the information. Make sure it is tied down, properly filled out with all necessary information.  As far as closing a deal, do the first attempt yourself. If you have questions transfer the call to a senior broker for explanation. It is important to remind you that all clients are clients of the company, if a broker leaves the clients stay with the company. All information is property of the company. Don’t speak to people you know about the company business. Information like this will eventually be used against you and this will result in problems for you and potentially your co-workers.  Don’t be the guy who messes things up for everyone. We will always find out who is the “Gossip Queen”.  Be advised, if you are not here, whether excused or unexcused, brokers will trade your book and add their numbers to YOUR ticket. If you are not working with a Senior Broker then the split will be 50/50. If you are working with a Senior Broker then the split goes to 25/25/50. Don’t give your money away for been lazy!”
 Paul took a zip of his drink, made a signal to Chad to play a recorded audio. Sofia’s call to Mr. Jenkins was all over the speakers for everyone to listen. By the time it was half way, Paul was surprised by Sofia’s knowledge and how she had presented herself. His signaled to Chad to stop the recording, and went on and on again.
“This is awesome. I have been in this business for a long time, and it is the first time I hear a new broker with so much enthusiasm. Her fronting was perfect!” But it is important to know that it was a waste of time to try to do it all alone. Sofia”… He went on…”you know that we have the complete script done for you, and what you have to do is to read it step by step, and do not go all over the board, unless you know how to get back into the basis. We do not need anyone here to try to reinvent the wheel. We have a system and it works,”
The meeting was not so terrible after all thought Sofia. She was glad that Paul did not hear her giving away web links. One hour and half later Stonegate receive a call back from Mr. Jenkins, but Sofia was on another call.
“It’s a call for Sofia, its Mr. Jenkins!” Said the secretary while turning towards where Jose Roberto was seated, and observing everyone’s reaction in the main room. 
“Oh.  Let me run over there… Oh, I see that she is on another call.” Jose Roberto said to the Secretary.
What to do? Shall I give the call to another broker? Shall I get the number and tell him that Sofia is on another call? I guess it’s better not interrupt her. Jose Roberto was uncertain.
“Transfer the call to me”
“OK, Line One.”
“Hello? Ah. .. Hi...Mr. Jenkins, this is Jose Roberto…I see from here that Sofia is on another call…”
“Just tell her to give me a ring. I will be here until 9 PM. She has my number”
“Click.
 “Wow, that was fast!”

 
“What happened?” The secretary asked
“He will be expecting a call back from Sofia”. Well, this is weird…Not, based on what Sofia said last...Maybe he is interested.  ‘I am starting to like this dike!’  
Meanwhile, Sofia was on a call and Chad was standing by his side listening to the conversation through a speaker phone.
 “It is just too good to be true, I mean it sounds too good to be true.” The Client said to Sofia.
“That is right Mr. Smith. I think so, as well. You see, must people are skeptical because they were taught to be. I believe and so do you that proof comes in many forms. The Commodities Market is a business too good to be true. Opinions in commodities are even better ‘too good to be true story.’ Is it fair to say that you passed many opportunities before for that very reason? Don’t let shallow thinking and fear keep you and your family from a tremendous opportunity in the market. Be good and be true to yourself and have courage to send me $ 5,000 and take advantage of this expected move.”
“Click.”
“Where do you get this stuff from? I mean, it was good, freaking good… Just keep on going baby!” Said chad.
Sofia smiled and kept on dialing another number to reach another prospect from her list.
“Hello Mr. Bowen? Hi, this is Sofia with ……”
“Thanks for the great explanation Sofia, but I am working with a stock broker”
“I understand Mr. Bowen, but please, let’s get us all on even ground here. Asking your stockbroker whether or not to do commodities would create a conflict of interest. It would not benefit him to tell you to diversify with another broker. I wonder why he never mentioned this type of opportunity to you, but let’s say if it was him recommending this to you instead, would you be more inclined?... I get it.”
“No, Wait.”
“I am here.”
“Well, let me think it over. I will call you back Sofia.”
“Mister Bowen? If I am on the phone when you call, just leave your name and a time to call you back, I have your number.”
“Click.”
“Why didn’t you ask him to leave number? Well, never mind!” chad said to Sofia
“Chad, I honestly prefer that they call me back and show interest, so I can discuss with them from the point where they were left. I keep track how far I have been with every call…see here, on this book? I have their names and what was not discussed.  At least I can go back one day and remind them of the opportunity they’ve missed”.
“That is very cool. When I was a broker I only got calls from existing clients. It is not easy to keep up with every call of prospects along with all the information required to give to existing customers”
“I didn’t know you were a broker before. Where?”
“Futuretek Trading Corp., a while ago. It didn’t work. The firm was closed down.”
“Oh, I heard it. That’s Paul’s old firm. Rickie told me”
“Rickie!  He is a great guy. I used to work with him. Actually Paul and I worked with him a long time ago at Group Two Financial Services”.
“I’ve never heard of this firm. Actually, I heard of so many firms, but they are all out of business. While I was checking for a job, every place listed in the internet was no longer in existence!”
“Yeah… We cannot have any papers on top of our desk or your bullets. You have to talk like you talk now. Nothing to read, but just what is in your memory”
“So, why do I have these papers here? I don’t need them anymore. I just need the outline of what I need to cover.”
“It’s what you suppose to have!”
“Good then.”
“I need something to drink” Sofia walks away from her desk leaving Chad behind
“Hey. Sofia, I am glad you’re off the phone!”  What Am I saying? “I have two names, no numbers…For you to call…he, he, he, that fellow Jenkins called you too.”
“Thanks Jose Roberto. I just hope he doesn’t procrastinate.”
“You can call me J.R.”
“OK, cool.”
Trim, Trim, Trim… Trim, Trim, Trim… rings the telephone at Mr. and Mrs. Jenkins residence. “Bob? Bob, can you get it?” Said Mrs. Jenkins while turning the knob of the oven to 350F. She was not in any hurry; she had finished confectioning the most perfect lasagna for dinner.
“No Sue, I can’t…I mean, I will be there in a second”
“Jenkins’ Residence, this is Susan”
“Hello Mrs. Jenkins, This is Sofia. I am returning Mr. Jenkins call”
“I know Miss Keller, He is expecting your call, but he is…oh good! … Here he is, Bob, it’s for you.”
“Hey Sofia, thanks for holding.”
“Hi Mr. Jenkins, I promise not to take much of your time. Did you have a chance to check on those web sites I gave to you? Uh hum… and do you have the piece of paper where you took your notes?”
“Yes, the paper is here… I checked the sites. I saw your name there… under Brokers. I also saw that your firm is under investigation, or better saying, there is arbitration or something going on.”
“It’s possible Mr. Jenkins; you know this is a very sensitive market. There is no room for errors. I will check the site today”
“I just hope you are not in trouble over there.”
“I hope so too! One thing I know Mr. Jenkins. The NFA’s job, rightfully so, is to check on ever firm. Please grab that piece of paper…
“I have it right here.”
Good…when I told you if we could catch a 5 cent move in our option…and we came to a total of $2100 per option, it is important to rephrase that if we can catch a 5 cent increase on your option the calculation is correct, but it is not easy to obtain the entire amount of the profit when you catch $5 cents.” Gosh what am I saying? “What I mean is… January’s price of a gallon of Heating Oil in the market is $2.84. Let’s say you want to enter in the market right now, and all of your paper work has been approved etc. I’ll send the ticket over to the floor. I know that your cost will be around $2.93, $2.95. This will be the price written on your contract, and we need to see a move from that point on to be on green.  This is what they call speculation. We are purchasing a contract from a speculator like you, and he wants to sell high. So he goes as high as he can go from the today’s price because we are foreseeing a price in the future. Do you understand this?
“Yes, I understand.”
“I am not quite sure you do Mr. Jenkins. It is even hard for me to explain, and believe me, I have seen tickets when prices were$ 2.80 and they were filled at $2.90 and the client did not like it very much. The reality is… you cannot purchase a contract for the price tag because you are purchasing it through the exchange, sold on the floor from another speculator. Behind this Option contract, there is an underlined contract in the future market that someone will take delivery. Not you! So, this person wants to sell it higher to you.
“I got it Sofia!”
“Good, but there is more!”
“What else more?”
“Let’s assume we got you a ticket for January and your price tag is $2.90. We will observe the computer and when the price of Heating Oil reaches $3.00 you will maybe get $2.95 for that ticket. The floor is buying it from you; therefore, the floor people want to buy it cheaper to sell it high. Now when we are $.5 cents ahead, there is timing value as well.  Option is a wasting asset. It deteriorates as time passes. If the price becomes very volatile it makes harder to get the value we want. In other words, we want the price to go up, and this is all there is. For what I figure in here Mr. Jenkins, I want you to invest $10,000 and when I see an opportunity to make in your hands $35% of that value, I will invite you to get out of the market.
“It makes sense Sofia.”
“I just want to make sure that my explanation from before, the one that looks good on paper, is different from reality because it is.”
Are you in Mr. Jenkins?
“Yes I am, definitely.”
“Fantastic! What is your fax number? What is your email, what is your Mailing Address?”
“You don’t need any of that Sofia. I visited your firm’s web site and I filled an application for an account under your number. I printed all the forms and I already got a FedEx authorization to send it to you tomorrow. Your company has the best site. Very friendly and very easy to use. I also printed all the other stuff I want to take a look at”
“Yey… I see it here on my screen Mr. Jenkins” Let me see…Regulation 135 Risk Disclosure…Option Disclosure Statement…Individual information form…Consent to Jurisdiction…Customer agreement… So far so Good, Mr. Jenkins…Welcome letter…Additional Risk Disclosure….It is all signed and completed…OK…Fees and commission page…Photo ID, Utility Bill…Form of payment…Mr. Jenkins? It says here that you are going to purchase 40 contracts?”
“Yes… We decided to taste the waters with $40,000”.
“Good…Tomorrow around 11:00 I will give you a call to let you know if we received it all.” If we do not see a good opportunity tomorrow, we will stay on the sidelines waiting for a good opportunity. You have a Good Evening Mr. Jenkins.”
“Thanks Sofia”
“You are welcome Mr. Jenkins”
“Click.”

 

The Commodity Broker - Chapter 2 -

The Commodity Broker - Chapter 2 - By Milton Laene Araujo


Chapter 2 – Stonegate Financial Services October 2006 to 2007

 

Stonegate Financial Services, located in Delray Beach, Florida, was registered as an Introducing broker in October 2006.  Stonegate was the lineal descendent of Futuretek Trading Group, a boiler room operation in South Florida. When the NF A issued a disciplinary complaint against Futuretek in 2005, many of its brokers transferred en masse to Majestik Commodity Corporation, another firm located in south Florida. The process was repeated when the NF A issued a disciplinary complaint against Majestik in 2006, and many Majestik brokers transferred to Stonegate.

Stonegate's owners, Jose Roberto Jalil and Anthony Rodriguez, and the majority of Stonegate ' s associated persons, had been associated with a string of "tainted" firms that had been disciplined by the CFTC and the NF A for fraudulent sales and trading practices. When Stonegate started up in 2006, almost its entire sales force had worked for tainted firms, most notably Futuretek and Majestic. One year later, by October 17th, 2007, when Sofia applied for an available position as an associated person the concentration of tainted brokers had been partially diluted, but remained high: out of 22 Stonegate associated persons, ten were not rookies, and all ten experienced associated persons - including Peter Zipe, Cindy Marks and Chris Spinster -- had previously worked for extensive periods of time for tainted firms. Stonegate steered its customers into patently dubious trading strategies that were designed to maximize Stonegate's commission income. Although, Stonegate’s principals and brokers probably knew, or suspected, or could have easily discovered these facts, a novice trader, such as a customer, with no knowledge of the commodity options business -- could not have readily known, suspected or discovered these facts. Sofia had no idea about this what-so-ever.

On October 3, 2007 – about, fifteen days before Sofia’s entrance into the firm, the NFA brought a disciplinary complaint against Stonegate and its president, Anthony Rodriguez, alleging that they had been allowing a suspended former principal of a firm disciplined for boiler-room practices –Jose Roberto’s brother, Paul Jalil the owner of Futuretek -- to run Stonegate.

 From Paul’s immediate entrance, Stonegate agents had engaged in misleading sales solicitations. Anthony Rodriguez became a puppet in the hands of Paul Jalil. Anthony had failed to implement the augmented supervisory safeguards mandated by NFA rules for firms with a high percentage of tainted brokers.

Paul Jalil, the man with all the money, was first registered with the NFA in January 2000, as an associated person and principal of a string of tainted firms, including Group Two Financial Services, Inc., Third Liberty Investments, Futuretek Trading Group, and Majestik Commodity Corp. In 2005, the NFA issued a complaint against Futuretek, Paul Jalil and others, alleging that Paul Jalil had defrauded customers and failed to supervise Futuretek. On October 16, 2006, Jalil agreed to settle those charges by agreeing to a variety of sanctions, including a six-month membership ban and other restrictions on his business activities.

 Notwithstanding these restrictions, Paul Jalil had a regular and active presence at Stonegate from the beginning, leading motivational daily sales meetings, offering trade recommendations to prospects, and hiring and firing new brokers. Jose Roberto Jalil, Paul's brother, was an owner and a registered associated person with Stonegate, but his presence in this business occurred when Paul did not have anyone else to use as his puppet. He became a registered principal of Stonegate on October 23, 2006, just as his brother was beginning his six-month suspension.

Luis Vanderval Rodriguez, Anthony's brother, and a want-to-be-broker filed an application for registration as an associated person with Stonegate on December 11, 2006, which remained pending due to his background. By letter dated January 31, 2007, the NFA had given Rodriguez the option to withdraw his application in lieu of submitting additional documentation concerning his arrest record. He remained working for Stonegate even without a license. He made calls, lied to clients and brought a great sum of money to his owners.

Gerald "Jerry" Zaipe, one of the most experienced brokers at Stonegate, was a registered associated person from December 21, 2006. Zaipe first became registered in 2003, and worked for a series of tainted firms, including United Investors, Group, Futuretek Trading Group, and Majestik Commodity Corporation. Mr. Zaipe is what we call a Loader. He received accounts opened by other brokers and worked on those accounts to increase profit for the business. Zaipe, along with all other senior brokers had learned the game, but  they all have  forgotten the human side of life.

The regular commission charged by most introducing brokers is $100.00, which covers to place the customer in the market and on a later date offset his contract. Stonegate was charging $250. A process called churning also was taking place. Senior brokers traded every day until the entire investment disappeared and a large commission was earned.



 

 










 

The Commodity Broker - Chapter 1 -

The Commodity Broker -

By, Milton Laene Araujo  - Chapter 1-


                                                                Chapter 1 – October 2007

Trim, trim, trim… rings the telephone at Mr. and Mrs. Jenkins residence. “Bob, are you expecting any calls?” Mrs. Jenkins said while turning the stove top slightly down.  She cleaned her hands with a dish towel and hurried towards the telephone, which was placed on the hall between the kitchen and the dining room. She cautiously checked the number on the caller ID with no avail. It displayed “No Caller Identification.”  Reluctantly, she picks up the receiver.

“Jenkins’ Residence, this is Susan”

“Hello Mrs. Jenkins, my name is Sofia…. am calling to speak with Mr. Robert Jenkins, is he available?”

“What is this about?” Asked Mrs. Jenkins already annoyed with so many unsolicited phone calls they have been receiving lately.

“I see here that Mr. Jenkins showed some interest in getting involved with the Markets, and I would like to have a few words with him before I put all the information he solicited in the mail”

“Just mail it”, said Mrs. Jenkins with her mind on the simmering cooking pan of stew she left unattended on the stove.
Robert Jenkins was seated on his favorite blue chair, less than five feet from the telephone, but he has refused to answer the phone since they had it installed in their place fifty or forty years ago. Telephone answering was for secretaries, and at home, it was his wife’s department. He liked his calls filtered to the max, and only gave the time of the day when matters were important. For some reason, he felt that this one was important. Not exactly for the caller, or least to say the call, but for the look of disdain his

wife showed while tapping her waist with her free hand to call his attention, and also, to make clear that she was cooking, and it meant serious business for her. “I will take it” said Bob going in direction of the phone, and taking that time to kiss his wife on the forehead, before taking the phone she just left up-side down.

“I understand Mrs. Jenkins, but as you know I have to make sure we have a real person who is truly interested in this type of investment…which is not for everybody…” Sofia was interrupted by a male voice.

“This is Bob Jenkins, how may I help you?”

“Oh Mr. Jenkins I am glad I got you there! I just said to your wife that you have showed interest in getting involved with the commodity market, and I want to ask a few questions before I put all the information you solicited in the mail.”

“Go ahead” said Bob.

“Uh… my name is Sofia Keller and I am calling from Stonegate Financial Services, here in Delray Beach, FL. I am calling because I received a request for information about exchange traded options, and I wanted to give you the courtesy of a phone call today to let you know that I will be mailing the material you requested first thing tomorrow morning. Mr. Jenkins. Have you ever invested in exchange traded options before?

“How did you get my number?”

“I got your number from a listing of people who either have or not invested in the market before, who completed some sort of internet questioner in this regard. Could that be possible?

“Oh, yes, I have, but it was a long time ago, gosh, I have forgotten it.”

“I will be mailing the material you requested first thing tomorrow morning. So tell me Mr. Jenkins, have you ever invested in exchange traded options before?

“Yes, once or twice in the past, I think…”

“I am sure you realize that timing is the key to making money in any investment, don’t you?”

“Uh hum”

“That’s especially true in the options market.  For example, our research is focusing in on what we believe is a tremendous opportunity that exists in the HEATING OIL market” … Sofia got some air and went on… “Who generally makes the decision in your household; you, your wife or both of you?

“It depends. If it is investment I do.”

“Now Mr. Jenkins, we believe this opportunity exists for three basic, but nonetheless important reasons. One being that the Department of Energy reported crude oil stock fell 8 million barrels compared to last week’s level. At this time of the year we should be building our inventories, but we are not. Considering that there is no demand of heating oil in the middle of the summer. And we can’t build it during the winter season. What do you think it does to the heating oil prices?

“Probably will go higher,

“That is correct Mr. Jenkins. What have you heard about heating oil so far this year?” Sofia glanced through her notes were it said: Listen to the client get a response…You must have heard something, maybe in the newspaper or on TV?”

“Let’s start with some basics: obviously the idea here is to buy low and sell high…Make sense?”

“Uh hum”

“Now, if I was to ask you when the Heating Oil prices will be the cheapest, when would you say that will be?

“Now, during the summer I suppose!”

“Obviously now because nobody is using it, better yet, nobody is even thinking about it. Now, Mr. Jenkins, if I were to ask you when you thought Heating Oil is in the highest demand, what would you answer?” … get an answer of Cold Weather or Winter.

“That’s right! Right before winter, or during the winter season, because of the cold weather people tend to heat their homes more than during warmer times of year, demand goes up…and makes the price go up…Dos it make sense?”

“Yes!”

“We believe this is going to happen this year for three key reasons and you are going to want to write these down. Grab a pen and a piece of paper. I wait”.

“I have it here”.

“OK. One is Supply, second is demand and the third is the U.S dependency on foreign oil. Do you have these down?

“I have Supply and Demand and Dependency of foreign oil. Is that what you said?”

“Yes, it is Mr. Jenkins. The refinery system in the U.S is old and unreliable at best. And because of this, refineries in the U.S. are having trouble taking crude oil and turning it into byproducts such as unleaded gas and heating oil. And because they’ve been trying to keep up with gasoline demand, they’ve neglected to refine heating oil ahead of this year’s winter demand, leaving us with dangerously low Heating Oil supplies that are considered insufficient by many experts…Mr. Jenkins. If you have inadequate Heating Oil supplies, you can see how that would move prices higher. Don’t you?”

“Yes.”

“Obviously, the colder the weather gets, the more people need to heat their homes, therefore the more heating oil people will use as a result. Make Sense? Now, as the winter approaches, we are headed into a peak demand period, where we may use the majority heating oil for the year! This excess increase in demand, in my opinion, is going to push prices far past last year’s record setting heating oil price of $2.45 per gallon! Do you follow me?”

“Yes, it is interesting Sofia, please go on.”

“Thanks Mr. Jenkins. If at any time this is boring you, please let me know, he, he, he, but when I start talking about this I just go on… Are you familiar with O.P.E.C. and what it stands for? O.P.E.C. is the Organization of Petroleum Exporting Countries. Such as Saudi Arabia, Kuwait, Iran and so on…40% of the world’s oil is located there. Starting on January 1st, they cut oil supplies by 1 million barrels per day to keep prices high. Does it make sense the higher the price of Crude Oil, the more expensive is to refine it into byproducts like Heating Oil, rubber, tires etc.” …

“It does.”

“Now there is one more thing to take into consideration, and that’s the Wildcard of Middle East Tension. Considering that more than one third of the world’s oil is located there, any supply disruption could create massive prices spikes. That being said, if the wrong bullet hits the wrong politician or if an oil pipeline is sabotaged, it could create fear that there will be a supply disruption of oil flow from the Middle East to the rest of the World, You follow me?

“Dang, I was not aware of all that, I mean, I hear it on TV and stuff but I did not know much…”

“Now Mr. Jenkins, in my opinion, any one of these factors alone could move the price of Heating Oil 15 to 20 cents per gallon higher. However right now, I feel we are experiencing all three. You follow me?

“Yes.”

“Good! There are two ways you can invest your money into this market. One way is called futures trading; in fact write that down, FUTURES. And the other is known as options trading. Write that down as well, OPTIONS. Now, with the Futures trading you have unlimited profit potential, however, you also carry an unlimited risk. Meaning Mr. Jenkins that you could lose more money than what you originally invested. I don’t even advise my wealthiest clients to get involved with futures. The investment vehicle that we use is OPTIONS, in fact just so you don’t confuse the two, circle the word options on your paper. Options also give you unlimited profit potential; however they carry a limited risk. Meaning your risk is limited to what you decide to invest. Based on that you as the investor can set the amount of risk you are willing to take on, Make sense?”

“Yep!”

“There are two keys to making money in these markets. Write these down, please: LEVERAGE and TIMING. Do you have that written down?”

“Yes”.

Let’s start with the leverage. What I am going to do is give you a hypothetical example of how this market works to show how you can potentially profit if things turn out as we expect. If you love the numbers I show you…what is the most you can put behind this recommendation, Could you handle $10,000?

“Sure”

“Where would that money be coming from?”

“I have it in the Bank as I have other investments”

“So, in other words, you could write a check for $10,000 today if you wanted to get involved with this investment?...I don’t want to overextend you. You have more money behind this, meaning, this isn’t the money you use to pay the bills with, is it?”

“Yes, I have other investments”

“Good, so you consider this money to be risk capital, Right?”

“Yes”

“Great, $10,000 will buy you 10 Heating Oil Contract Options, write that Down…

$10,000 = 10 Heating Oil Options

“Done”

“Mr. Jenkins, every single one of these options gives you a leverage over 42,000 gallons of Heating Oil. Write that down…

42,000 gallons per option

“Done”

“Now, do you remember that before I told you I was looking for the price to rise 15 to 20 cents from here?”

“Uh hum”

“Good, based on that type of options we’re buying we’ll be looking to catch a fraction of that move in profit. So for example, let’s say we just catch a 5 cent move in our option. Write that down…

…write down, 5 cent move per gallon.”

“Done”

Now if you made 5 cents per gallon on 42000 gallons…write that down…

5 cents per gallon X 42000 gallons = $2100 per option

“Done, but it sounds too good to be true”

 “I haven’t finished yet, Mr. Jenkins, but how many options did we say we could buy with $10,000?”

“10”

“Right” 10, so on the next line write down…

$2100 per option X 10 options = $ 21,000.”

“Wow!” Said Mr. Jenkins

“Write that amount down and circle it. That’s $21,000 to you if things work out as I plan. Tell me, is that the kind of return you were looking for when you requested the information?

“I never saw things this way Sofia. I usually let my broker do the work and I trust him.”

“Understand this Mr. Jenkins, my motivation is to make you money and built a relationship with you. Now, what I just gave you was the good news, the so called cherries of the investment. However, I can’t just give you the cherries without also giving you the pits of the investment as well. It is the risk. The risk of this opportunity is that you could lose all or part of the original investment, but never pay a penny more. Understand?

“Yes, like in all investments”.

“Now, there is a risk management tool that we can use on your acct. Known as stop loss order. Are you familiar with a stop loss?”

“Not really.”

“Not a problem, let me explain it, a stop loss is an automatic sell trigger that is attempting to limit your losses should the market move against your position. We set the stop option around 40% of the original investment, so based on the amount you’re considering, we would set the stop to attempt to limit your losses and protect about $4,000. So you understand stops are not guarantees, they are attempts, if the market moves dramatically against you, you may protect less than $4,000 or on the other hand, if the market rallies back up after the stops been triggered, you may get more than $4,000. However, in my experience, when the stops work properly we will get out of the market protecting what we are originally expecting. Make sense?”

“Yes, it does. Why no one ever explained this to me before?”

“I can’t answer that Mr. Jenkins, furthermore, as our firm finds additional opportunities, we will advise you so that you might take advantage of other situations that we believe will offer you similar profit potential. You’d like that. Right?

“Yes”

“Mr. Jenkins, remember I told you that there are two keys to making money with these markets. They are Leverage and timing.”

“Uh hum”

“We’ve pretty much covered all the leverage. The other key to money making is timing!... and the time on this investment Mr. Jenkins, is right now… the reason I bring up timing is that these markets move quickly. One of the most important parts of my job is to position you properly in this market, and with the news that’s out I think we can turn a quick profit on your $10,000 investment in just the next 2 to 3 weeks. You’d like that right?”

“I don’t think I am ready yet”.

“If you need to take your time, just remember that once this news gets get absorbed by investors, everybody will be buying into this market. That’s why the more seasoned investors are buying now, in anticipation of the move. Of course I realize not everybody can make a decision right now, but let me ask you, if you had this information in front of you and it all makes sense. How quickly can you act on this investment…If you loved it could you get involved today or tomorrow?”

“Hey Sofia, my wife is calling me to eat lunch. Can we talk more after lunch?”

“Absolutely Mr. Jenkins, but before you go, let me give you my information.

“Sofia, where are you from?”

“I am originally from Brazil, but I have been in America since 1988 Mr. Jenkins. I know it sounds funny when I say WE, referring to America, but I am an American as well. My accent will stay with me for as long as I live. “

“I kind of like it Sofia. You sound sincere and knowledgeable”.

“Thanks Mr. Jenkins, but before you leave,   I want you to have the NFA web site. There you can see who I am and where I am working. Are you ready? Ok. Please jot down this information for me: My name, Sofia Keller and my NFA ID is 0385773. My number here is 561-330-2332. The site is www.nfa.futures.org , and the other I want you to check is  www.barchart.com . The second one will show prices of commodities today. Check them both out.”

 “I will call your number and ask for you directly.” Until then!”

“Click!”