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I currently hold the following positions in grains & beans:
Long CK9-CZ9
Short CH9 P3.7
The USDA report on corn yesterday was bearish, but sales look strong for the foreseeable future.
In Brazil and Argentina they will replace some corn acres and plant soybeans, as the price for soybeans there is very lucrative.this will suppport the May contract.
Seasonals and COT data are in favor of these trades.
Depending on weather in South America, the price of corn will move up slightly or strongly in my opinion. Thus, I split my position in the futures spread and short options.
I currently hold the following positions in grains & beans:
Long CK9-CZ9
Short CH9 P3.8
The USDA report of last week was bullish for corn, and sales for corn look strong for the foreseeable future.
In Brazil and Argentina they will replace some corn acres and plant soybeans, as the price for soybeans there is very lucrative. This will suppport the May contract.
Seasonals and COT data are in favor of these trades.
Depending on weather in South America, the price of corn will move up slightly or strongly in my opinion. Thus, I split my position in the futures spread and short options.
Additionally I hold the KWH-WH (seasonal trade), WZ-WN spreads and short WH P4.90 options (bullish USDA report, weather issues in Australia, Argentine, and Russia).
The idea of this trade came from watching a broker webinar 3 days ago. I would love critique and feedback.
On 31-Oct, I opened a soymeal collar:
Long Future : Mar '19 at 306.9
Long Put (270 strike) : Mar '19 at -1.35 (debit)
Short Call (320 strike) : Mar '19 at 8.5 (credit)
I make the max possible loss to be = diff between future and put strike + price paid for put - credit from short call
= (306.9- 270)*100 + (1.35*100) - (8.5*100)
= $2,983 (includes comms) per contract.
I will base the % return on the max possible loss and not on the margin (which is lower).
Magically, yesterday, the underlying rose 10 points and at one stage was at 318. The combo was making around $800 profit. On opening, my plan was to try and close if the future hits 320, since after that the gains are limited by the short call. However, even after that point, since the delta of the calls is around 0.5 and that of the future is 1, then further rises in the underlying will still be profitable, so I'm holding for now.
So for those more experienced in futures collars, my questions are :
1) Do you sometimes just open the future + put, and wait for a bounce before selling the short call?
2) Is there is a guideline for picking the put/call strikes? (I may pick a zero cost collar next time for example, if I'm more bullish about the underlying)
3) Do you sometimes use closer months for the call expiry, with the view that it will expire worthless and you can
then sell more calls for the following month, and the next etc? Thereby increasing the total credit received.
4) I didn't take into account finer details like volatilities etc - any recommendations?
1) No, usually not. I am not good in foreseeing the short-time moves of the price.
2) I usually choose zero cost collars.
3) No, usually the strike price is too close to the current price or the profit of the call is too low.
4) There are a lot of things to take into account regarding fundamentals. But this is an own topic.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,057 since Dec 2013
Thanks Given: 4,399
Thanks Received: 10,225
@zxcv64 don't forget that buying both a future and a put is the same as buying a call.
So long future with a collar has the same payoff as a long call spread, which is the same as a short put spread.
Long Fut + Long 270 Put + Short 320 Call ~ Long 270/320 Call Spread ~ Short 270/320 Put Spread.
I was asked about my opinion regarding Soyoil in another thread, but answer it here to allow other traders to find it in a couple of weeks.
Honestly, I do not have a strong opinion on Soyoil. I do not hold a position, and I do not intend to enter a position in the next couple of weeks.
Seasonals suggest a move sidewards for the next couple of weeks.
COT data for Soybeans - I do not have charts for Soyoil - are bullish.
Supply & Demand for Soybeans to me looks bearish, but a lot will depend on how much China will buy. But I assume that a lot of buying from China is already priced.
There is no clear picture to suggest either buying or selling.
You intend trading the Soyoil contract because of its low margin. I would suggest to start spread trading as here margins are significantly lower. And you have a larger choice of trades with a very small account.
Currently the only interesting trade in the Soybean Complex to me seems to be the 5*CZ - 2*SX. I think about entering this spread in the near future.