And offering a critical backdrop, there is the ongoing reality of geopolitical instability and tensions, as well as news flow from critical economies such as China, which have driven rallies but also demanded a closer inspection to predict where commodity prices may go in the future.

One of the most talked about of these commodities is of course, lithium, which hit an all-time high of 5750,000 Chinese yuan per tonne (CNY/t) in December 2022 before slumping and showing volatility ever since; it’s trading now at 72,500 CNY/t.

This year has been a particularly bad one for the critical metal, with it falling 24,000 CNY/t since the start of 2024, based on trading on a contract for difference (CFD) which follows lithium’s benchmark market.

Reflecting on these patterns, Saxo Bank’s Head of Commodity Strategy Ole Hansen said the lithium market appeared to have reached its lowest point, but a move up again could take time.

“The lithium market remains challenged by the overproduction capacity built up during and after the 2022 surge and subsequent collapse,” he said.

“With the current price starting to make some projects uneconomical, it’s our view that the race to the bottom has ended – however, for the price to recover, demand has to improve, and this may take longer to achieve given the slowdown in EV rollouts.”

Despite being highly watched and newsworthy, the market for electric vehicles (EVs) is definitely on a slow track, as evidenced by Ernst & Young’s fifth annual Global Mobility Index, which showed demand levelling off, with buyers expressing concern about the infrastructure for charging.

Released in September, the report included 19,000 respondents across 28 countries, and indicated that interest in purchasing an EV was still present – rising from 55% to 58% since the previous year – but still sluggish, with demand shifting from 30% to 55% between 2020 and 2023.

For most respondents (27%), their key issue was lack of charging infrastructure, while 25% said they were concerned about EV range, and 18% saying that the length of time taken to charge the vehicles was also on their minds.

A new question in the survey – on the cost of battery replacements – returned a 26% expression of concern about this issue.

But this reflects only one part of a wider story, which Mr Hansen said was a move by investors away from stocks connected to the green energy transition.

“I see very little enthusiasm for green transformation metals and the companies involved – reflected in the steep losses the related stocks have witnessed in the past 18 months,” he said.

“For that to change, the fundamental outlook needs to improve, followed by hedge funds abandoning long held and very profitable short positions across the green transformation and energy storage sectors.”

Mr Hansen also pointed to economic news coming out of China as an underpinning factor in the performance of lithium and other metals.

“China has yet to address their overriding problem, which is low consumer confidence, and an oversupply of housing funded by underfunded banks and local governments,” he said.

“With that in mind, a recovery will be bumpy, but overall, the electrification of China is ongoing at a rapid pace and that will continue to underpin demand for copper and lithium while other products like steel and iron ore may struggle.”

The red metal has – in contrast to lithium – experienced a very good year indeed, reaching an all-time high of US$5.20 per pound (lb) in May, with an overall rise of 0.45 USD/lb or 11.60% since the start of 2024. (Currently trading at US$4.33/lb.)

“Copper continues to receive a great deal of focus from investors looking for higher prices amid strong and rising demand driven by the green transformation,” Mr Hansen said.

“However, the rallies seen this year have been unsupported by fundamentals, as China’s housing sector has struggled and inventories monitored by the major futures exchanges have stayed elevated.”

He added investors might be cautiously looking at conditional factors in the short term but maintained that copper would be on solid ground in the long-term.

“We maintain a bullish outlook for copper but for now, the upside is limited due to an overhang of supply and worries about the economic outlook,” Mr Hansen said.

“The electrification of the world is real and, in the coming year, the combination of robust demand towards grid upgrades and electrical appliances will likely be met with tight supply from miners struggling to increase production.”

An even stronger performer this year has been of course, gold – which reached an all-time high of US$2,790 per Troy ounce on Wednesday (October 30), with an overall rise of US$721.72/t oz, or 34.99% since the start of 2024.

Given the proximity of this recent leap to the U.S. election next Tuesday, one could be forgiven for thinking this was the key factor to keep in mind. Mr Hansen said it was certainly relevant, but added that a long list of other political and economic concerns were also keeping this commodity strong.

“I see limited signs of exhaustion in the gold market,” he said.

“The metal has rallied by more than 30% this year as investors around the world seek protection against multiple uncertainties, all pointing to an unsettled world.

“The main drivers of this bullish phase include concerns over fiscal instability, safe-haven demand, geopolitical tensions, de-dollarisation driving strong demand from central banks, Chinese investors turning to gold amid record low savings rates and property market fears, and increased uncertainty surrounding the US presidential election.

“Additionally, rate cuts – by the US Fed and other central banks – are reducing the cost of holding non-interest-bearing assets like gold and silver. This environment is already spurring renewed interest in gold-backed ETFs, particularly from Western asset managers who have been net sellers since May 2024.”

When it comes to the link between the Trump-Harris race and trends in the gold price, Mr Hansen outlined a theory of how fears about a Republican-dominated political scene were pushing investors towards the safe haven of this metal.

“Given how the geopolitical risk premium has deflated in crude oil (which slumped the most in two years on Monday), we conclude that the latest strength in gold is increasingly being seen as a hedge against a potential ‘Red Sweep’ in the US election, where one political party (in this case, the Republicans) controls both the White House and Congress,” he said.

“This scenario raises concerns about excessive government spending, pushing the debt-to-GDP ratio higher, while fuelling inflation fears through tariffs on imports and geopolitical risks.

“Investors are turning to precious metals as protection, even as expectations for lower rates and easier financial conditions fade, as the FOMC may end up being forced to pause the current rate-cutting phase.”

At this stage, the race is still very tight, with a CNN report on Wednesday indicating Harris maintains a tiny edge over Trump in two of three key states and is tied with him on the third.

Michigan voters appear to favour Kamala Harris by 48% compared to Trump’s 43%, while in Wisconsin the difference is 51% in her favour, against 45% for Trump. In Pennsylvania, voters have shown 48% support for each candidate.

Upon news of the result next week, Hansen added, the situation for gold might change.

“Nothing ever goes in a straight line and, having rallied as much as it has, gold can still run into a deep correction after November 5 if a ‘sweep’ scenario does not ensue,” he said.

“But as long as the above-mentioned reasons for holding gold do not go away, the prospect for even higher prices remains.”

Join the discussion: See what’s trending right now on Australia’s largest stock forum and be part of the conversations that move the markets.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

Using the moomoo share-trading platform’s heat map feature we can see just how positive investors are toward the artificial intelligence and related sectors: it reveals 77% growth in semiconductors (year to July 12), 34% growth for internet stocks and 59% in computer hardware for the US market.

The fourth industrial revolution, powered by AI, is just getting started. So, if you haven’t invested yet, you have not missed the boat.

Case in point, NVIDIA recently inked partnerships with companies such as Novo Nordisk, J&J and GE Healthcare. These collaborations will have a material impact on NVIDIA’s revenue later this year and next, which is very exciting for shareholders. Novo Nordisk will build a supercomputer using NVIDIA chips to discover new medicines and treatments. It will be Denmark’s first supercomputer. This illustrates not only demand from new sectors, but new geographies.

So, considering that, and predictions that inflation/interest rates will stay higher for longer, sectors set to benefit from the AI pivot include:

Investors may be best served favouring quality stocks in the AI space, companies that can sustain higher interest rates and grow earnings and profits. These companies have high, recurring cashflows, quality clients, and low debt-to-equity.

How do you find them? Use the moomoo app to check earnings per share and revenue estimates (as well as other financial indicators), as it is earnings and earnings upgrades that drive share price growth.

With the price at record high, uranium is a sector of particular interest, with key investments including:

This sector is especially volatile, so treat your investments with caution and consider using moomoo’s sentiment indicator and charts to plot your entry and exit.

Jessica Amir is one of Australia’s leading market strategists and commentators, appearing on TV, radio and online and print news to share her views on macroeconomics and investments. She works as a market strategist with moomoo Australia.

The moomoo share-trading platform has 22 million users worldwide and supports Australian investors of all backgrounds and experience levels. Our mission is to eliminate barriers to investing and equip users with the tools they need to achieve their goals. We are Money Magazine‘s online broker rising star gold winner for 2024.

Disclaimer: In Australia, the financial services in the moomoo app are provided by Moomoo Securities Australia Ltd, ABN 51 095 920 648, Australia Financial Services License No. 224663. Any investment carries risks. Please read the Financial Services Guide and other disclosure documents before you decide to use our Financial Services. For details, please visit our official website www.moomoo.com/au.

The market data and information presented in this article are general in nature and did not take into account your objectives, situations or needs. Consider the appropriateness of the information in light of your personal circumstances before making investment decisions, and where necessary, consult a licensed financial adviser. Historical data is not indicative of future performance.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

While some hail 0DTE options as the fast lane to quick profit, others caution they’re a surefire way to crash and burn. So what’s the real story?

0DTE options may sound exotic, but they are fundamentally the same as any other options contracts in the market.

What sets them apart is their expiration date, which is set to occur on the same day they are traded.

This unique feature compresses the timeline for potential profits or losses, making them a point of interest for traders looking for quick outcomes.

Their rapid growth since 2022 has been fuelled by advancements in trading technology and increased market volatility.

Saxo offers a selection of 0DTE options across various asset classes and indices, catering to both investors and traders with diverse needs and risk profiles.

The advantages:

Time Efficiency: 0DTE options offer an opportunity for quick decision-making and potentially rapid returns – especially advantageous for premium sellers.

Lower Premiums: The shorter expiration timeline often results in lower premiums compared to options with longer expiration dates.

Flexibility: 0DTE options enable traders to capitalise on short-term market movements without the long-term commitment that other options require.

Hedging capabilities: 0DTE options are a targeted solution for investors and traders looking to hedge against intraday risks.

The risks:

Complexity: Options trading is inherently complex, and the rapid time decay of 0DTE options adds another layer of difficulty.

Financial: The leveraged nature of options means you can lose more than your initial investment.

Emotional: The quick pace and high stakes of 0DTE options can be emotionally draining.

Impact of market events: 0DTE options are sensitive to market events and volatility.

0DTE options, while similar to their longer-dated counterparts, possess distinct features that influence strategy selection.

Their short lifespan and high leverage make them more sensitive to market movements, requiring specific strategies that account for these variables.

The choice of strategy should always align with your market outlook, risk tolerance, and trading objectives.

Buying and selling long options: This strategy has gained popularity among day traders, particularly for liquid Exchange Traded Funds (ETFs), which opens the door to advanced techniques such as scalping, high-frequency trading and momentum trading.

Defined risk strategies: Strategies like ‘iron condors’ or ‘vertical spreads’ are often preferred for their limited loss potential, providing a safety net in volatile markets.

Selling premiums: 0DTE options are highly attractive for premium sellers due to their accelerated time decay.

Delta neutral strategies: Strategies such as ‘straddles’ and ‘iron flies’ can be beneficial for traders looking to profit from volatility.

Spreads and butterflies: These effectively reduce capital outlay while maintaining a reasonable probability of profit.

Trade size: Position sizing is commonly tailored to match a predefined maximum loss.

Capital allocation: A common practice is to allocate no more than 1 per cent of your total account value, including existing positions, for a single trade or position.

Margin utilisation: For the scope of this article, a good practice is to not exceed 50 per cent margin utilisation.

Stop-losses on short legs: Sometimes, relying solely on the maximum loss of a strategy isn’t practical – in such cases, you can set a stop-loss or a stop-limit on your position.

Risk-to-reward ratio: For high-probability strategies, which typically have a Probability of Profit (POP) of 80 per cent or higher, a commonly targeted risk-to-reward ratio is 3:1. This means you’re willing to risk $3 to make $1, reflecting the strategy’s higher likelihood of success. On the other hand, low-probability strategies, such as those with a POP of 30 per cent, often aim for an inverse risk-to-reward ratio, like 1:9. In these scenarios, one successful trade must often compensate for multiple unsuccessful ones.

Psychological preparedness: Being mentally and emotionally prepared to stick to your 0DTE strategy is crucial.

Selecting the appropriate 0DTE options is no small feat:

Underlying asset: Selecting the right underlying asset for your 0DTE trades will be influenced by multiple factors, such as the type of options (American vs European), the asset class (ETF vs Index), and your knowledge of specific economies or sectors. News events can also dramatically influence an underlying asset’s price.

Liquidity: The ease with which you can enter and exit positions is pivotal for the success of your trades.

Implied Volatility (IV): IV reflects the market’s expectation of how much the underlying asset will move. A higher IV means the option is more expensive – selling strategies may thus offer higher premiums. However, IV is not static – it’s influenced by a host of factors, including current news events.

Strike Selection: Out-of-the-money (OTM) options may be suitable for premium sellers, while in-the-money (ITM) options may be more appropriate for directional trades. One tip is to consider the Delta of the option, as well as its volume and open interest.

Time to Expiry: Unlike longer-dated options, the time decay in 0DTE option contracts is a rapidly accelerating force. Some traders prefer to initiate positions at the start of the trading day to capitalise on full-day movements, others might wait until around lunchtime, and some may enter the market in the last few hours, aiming to take advantage of time decay.

Your exit strategy should also be well thought out. While some traders aim to hold their positions until the options expire worthless at the end of the day, others may look to exit earlier to lock in gains or minimise losses.

For most 0DTE stock options and many index options, a standard contract represents 100 units of the underlying asset.

Choosing the appropriate contract size intersects with your overall risk management strategy. Are you comfortable risking a large nominal amount, or do you prefer to keep the stakes lower? The contract size can also influence collateral requirements.

Before diving into the fast-paced world of 0DTE options trading, it’s crucial to have a systematic approach. This checklist is designed to be your ‘pre-flight routine’, helping you consider all the key aspects that could affect the outcome of your trade:

Disclaimer: Saxo Capital Markets (Australia) Limited (Saxo) provides this information as general information only, without taking into account the circumstances, needs or objectives of any of its clients. Clients should consider the appropriateness of any recommendation or forecast or other information for their individual situation.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.