March Corn is up 7 ¾ cents at $4.05 ½ per bushel this morning as I write.  The included chart shows that March Corn continues to trade inside a range between about $3.75 and $4.25.  So far, all the trading within that range is just noise as evidenced by the multiple bull and bear crosses in the directional movement indicators and steadily declining ADX line over the past month.  It is markets like these where a trader needs to be patient and let all the noise finish and wait for the market make a decision on which way it wants to go.  Having a ratio call spread in place right now is a great way to sit around and wait.  While the market churns sideways in a defined range, the ratio call spread doesn’t hurt us one bit, and actually improves the chances for success, because if a bullish break out occurs, a lot of time value has disappeared which is what we want for ratio spreads.  If corn breaks down, then fine, we took in a credit to do the spread up front, so if corn doesn’t come back, then we will eventually get to keep the credit.  My expectation is that eventually corn will break out to the upside.

 Followers of this letter should be long one March Corn ($4.30 strike) call option from 17 ¼ cents and short 2 March Corn ($4.90 strike) call options at 7 3/8 cents each.  (As a result of the profit made on the short $3.20 puts, our cost basis of this ratio spread is now a 1 cent credit!)

There are 60 days left until March options expire.

 With all the price tests above $4.00 recently,  I would hope that the producers have already liquidated most if not all of their corn that needs to be sold.

 David Hall

 The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 This newsletter is not intended for dissemination to the public without prior approval from David Hall.