Beware of promises of profits from commodity futures and options trading based on the events of September 11, 2001 and other public information relating to the war on terrorism.
Be alert to solicitations for transactions in commodity futures or options contracts based on claims that you can make a lot of money with little risk by trading in commodities affected by well-known current events, such as the attacks of September 11, 2001 and the war on terrorism.
Companies often use telephone call solicitations, email messages, Internet advertisements, websites, Internet chat room discussions, or radio and television advertisements and infomercials to promote commodity futures and options trading.
The CFTC is aware of solicitations claiming that changes in the market because of the September 11 attacks and other world events have created an opportunity to make big money by trading in commodity futures and options.
Solicitations may promise quick riches, such as turning $5,000 into $20,000 in just a few months with predetermined risk. We are aware of pitches that a purchase of futures or options in crude oil will be profitable because unrest in oil producing countries will drive up the price of this commodity.
These sales pitches are false: increases in the demand for commodities due to world events do not necessarily result in the increase in the value of an option or futures contracts. The market has already factored such demand into the price of futures and options. Markets respond immediately to new information, within a few minutes or hours. The prices of commodity options and futures contracts already take into account all known or predictable market conditions.
Claims that the risk of purchasing commodity futures and options can be predetermined or fixed are misleading. Purchasers of commodity option contracts can lose every penny and because futures contracts are leveraged or margined, customers may be liable for losses in excess of their initial deposits.