Overnight, March Corn was up 2 ¾ cents at $4.16 ½ per bushel. The include chart shows that March Corn is beginning to show more and more strength and resilience while trading near the upper end of the trading range. The only thing remaining is for March corn to break out over the $4.25 area on good volume. That would be breaking out over the upper end of the trading range and the price target measured by the height of the range would be about $4.75. Coincidentally, the $4.75 area is near the June price highs last summer. It is interesting on how markets eventually return back to important price areas in the past. They are like magnets. The directional movement indicators are holding a bullish posture, just barely, and the ADX line is meandering sideways. We need that break out!
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 50 days left until March corn options expire.
Short one May Corn ($3.70 strike) put option from 9 cents or $450 gross credit.
Long one May Corn ($4.30 strike) call option from 29 ¼ cents and short one May Corn ($4.60 strike) call option from 18 ¾ cents for an overall cost of 10 ½ cents or $525 gross.
There are 113 days until May corn options expire.
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.