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0

Not really. Even if you tried, the vig would eat you alive as the scale is too small for your purpose. You would do better just gambling on stocks or options with big amounts that would, assuming you actually win, more than pay for the commissions fees and research.


4

If your costs are in US dollars, I-Bonds adjust yield and TIPS adjust principal periodically using the US government's CPI-U measure of consumer price inflation, including food and energy. Whether the CPI-U national aggregate average market basket corresponds well with yours is a separate question to review.


3

Yep... you could buy in bulk. If you think the price of toothpaste will go up in the next week, bulk buy 50 tubes now. If they go up, you've won, if they stay the same, you haven't lost anything. Household goods like that don't usually drop in value, so it'd be hard to lose, but they do go on sale, so buy in bulk when there is a sale or from a wholesale ...


2

There's no futures market for most retail consumer products to support individuals hedging. As others have mentioned, housing is one of the biggest expenses you have, so buying a home or having a long-term lease is a way of stabilizing this cost. Utilities may offer long-term contracts. This gives you predictable expenses now, but you could get a shock when ...


11

The largest personal cost you have is probably housing - and you can hedge the risk of real estate fluctuations without use of financial instruments. ie: you can buy your home. You might not consider this 'using the financial markets', but if your goal is actual just 'a stable cost of living' as you say, then this can help with that. Of course, it adds on ...


39

You don't consume enough of any one good to make hedging with futures economical. I'll present an alternate method - you hedge against risk in household expenses by setting a budget and sticking to it. You may not be able to fully control the cost of toothpaste, but you can set an overall budget that includes some discretionary items, and adjust if prices ...


9

In theory (but not practical in reality), you could hedge each of those expenses with various inflation swaps, futures, and other OTC products. Housing costs can be hedged by exposing to REITs returns through LEAP Call options Utility costs can be hedged by exposure to natural gas futures and call options on utility companies. Gas can be hedged using an oil ...


0

The choice of investment in Options or Futures is one of purely risk appetite. Fundamentally, an investor with Options can ONLY lose the amount of money of the Option purchase. This means an Option purchased say for $1.00 in the worst case can go to $0. Options lose value over time as the end date is reached, so typical options trades are only open for a ...


15

In the US, options (other than options on futures) are securities (like stocks), are regulated by the Securities and Exchange Commission (SEC), and can be traded in a normal brokerage account. Futures (even those on financial indexes) are commodities, are regulated by the Commodity Futures Trading Commission (CFTC), and require an account authorized for ...


12

These are just two products and not really an 'either-or' comparison; a little bit of apples and oranges. Still, there is some merit in looking at each product in the terms you've raised. Options [These securities give one person the 'option' to buy or sell an underlying security at a specific price, for a specific period of time. If I buy an AAPL call ...


0

Another CME page clears it up: European Style Options: can be exercised only at expiration. The majority of CME Group options on futures are European style and can be exercised only at expiration.


0

I'll just address the option component of this. There are software programs such as Optionvue which can tell you how a position (or multiple positions) will perform at any price, at any implied volatility, on any day prior to expiration. There is a fairly easy alternate answer to this but it can't be provided based on the information provided. This could ...


0

Yes, theoretically, one could "trade" futures and options on just about any statistic. In fact, weather derivatives were once a hot (pun intended) trading instrument when Enron was involved. They are still traded somewhat but not as heavily as they once were. However, the reason that these exist was that there was some sort of direct financial ...


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