The included chart shows that December Corn prices look strong and may possible move sharply higher over the next few months. On the other hand, if summer weather cooperates, we could also end up with a very large crop thus pulling prices back down. We are currently short 6 December Corn $4.20 puts from 8 cents, that are associated with other long puts at higher strike prices that we already own as well. Today, I recommend attempting to buy back to liquidate all 6 of the short December Corn ($4.20 strike) put options at 1 cent per bushel. Let’s leave this order in GTC because either more time needs to wear off or prices need to rally further to get this order filled.

This will lock in a profit for that trade and take that downside risk off the table just in case we do end up with a bumper crop this year and prices fall sharply. By the way, we already have Republican candidates for President already saying that we don’t need subsidies for the production of ethanol anymore. This could affect corn usage as well down the line.

Followers of this letter should be in the following December positions:

Long 3 December Corn ($4.50 strike) put options at 13 ½ cents per bushel each.

Short 6 December Corn ($4.20 strike) put options at 8 cents per bushel each. (Attempting to liquidate all 6 of these short puts for 1 cent per bushel, GTC!)

(There are 185 days until December Corn options expire.)

Long 1 December Corn ($6.50 strike) call option from 58 3/8 cents per bushel.

Short 1 December Corn ($7.30 strike) call options from 36 3/8 cents per bushel.

Short 2 December Corn ($4.50 strike) put options from 13 cents per bushel each.

(There are 185 days until December Corn options expire.)

Long 1 December Corn ($8.00 strike) call option from 30 ¼ cents per bushel.

Short 2 December Corn ($8.90 strike) call options from 17 1/8 cents per bushel each.

(There are 185 days until December Corn options expire.)

Long 2 December Corn ($9.00 strike) call options at 17 ¼ cents per bushel each.

Short 4 December Corn ($10.00 strike) call options at 10 5/8 cents per bushel each.

(There are 185 days until December Corn options expire.)

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.