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Updated May 26, 2022
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August 2nd, 2017, 03:44 PM
Los Angeles, CA
Posts: 64 since May 2017
Thanks Given: 49
Thanks Received: 136
myrrdin
No, I did not sell calls on corn, soy, or wheat.
We are in a weather market, and at this time of the year you can loose a lot of money when selling options. Currently I avoid selling options on these commodities, as it is hard to predict the weather. The reason for the recent retracements was a cooler and wetter weather forecast last weekend. But it could have been hotter and drier as well - who knows in advance ? And in this case, especially soybean prices would have been exploding.
The problem for option sellers: If you win you win a small amount. If you loose you loose a lot. Thus, you have to make a high percentage of winners. But trading during weather markets is like
flipping a coin.
There might be interesting opportunities for call sellers when the crops are more or less made.
Volatility often is still quite high, but risk of an unforeseen large price move is lower.
Best regards, Myrrdin
I almost got burned selling corn puts per a bullish recommendation from Hightower. Fundamentally it may be the right direction due to the hot and dry weather affecting pollination and potentially lowering yields; but the ups and downs are a bit too pronounced for my taste. Managed to get out unscathed; but I'll be more careful this time of year with grains.
What about meats? What are your thoughts on selling puts on hogs?
Can you help answer these questions from other members on NexusFi?
Best Threads (Most Thanked) in the last 7 days on NexusFi
August 2nd, 2017, 04:11 PM
Linz Austria
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Commodities
Posts: 1,938 since Nov 2014
Thanks Given: 3,688
Thanks Received: 2,651
TFOpts
I almost got burned selling corn puts per a
bullish recommendation from Hightower. Fundamentally it may be the right direction due to the hot and dry weather affecting pollination and potentially lowering yields; but the ups and downs are a bit too pronounced for my taste. Managed to get out unscathed; but I'll be more careful this time of year with grains.
What about meats? What are your thoughts on selling puts on hogs?
As explained several times: It is not the time to sell options on grains or beans.
Carley sent out a trade suggestion today to buy a LHZ future and sell a ATM call, what is essentially equal to sell a LHZ put.
I currently prefer holding strangles in LHV and LHZ, after liquidating the LHQ strangle a couple of days ago with a profit beyond 90 %.
You could try to sell the puts tomorrow, and to sell calls above the market after an upwards move. But legging in is a dangerous game ...
I also hold strangles in LCV and LCZ.
You can find the details of my positions in an earlier post in this thread.
Best regards, Myrrdin
August 2nd, 2017, 04:26 PM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
TFOpts
I almost got burned selling corn puts per a
bullish recommendation from Hightower. Fundamentally it may be the right direction due to the hot and dry weather affecting pollination and potentially lowering yields; but the ups and downs are a bit too pronounced for my taste. Managed to get out unscathed; but I'll be more careful this time of year with grains.
What about meats? What are your thoughts on selling puts on hogs?
LHz drop usually ends 10-15 of Aug.
https://public.tableau.com/profile/ron.h8870
August 6th, 2017, 12:53 AM
Minnesota
Posts: 89 since Feb 2017
Thanks Given: 178
Thanks Received: 38
myrrdin
Currently I hold the following positions in the short options portfolio?
LCV P100+P106 / C136
In my opinion, the highs are in, and LC prices will move more or less sidewards. But there will be strong moves upwards and downwards.
CLZ C58-68
Intend to take profit at 50 %, if given the chance soon.
Currently I do not hold ES puts, as there are so many other promising trades around. Among others, I hold spread positions in the Financials, RB-HO, KW-W, LHG-LHV, LHG-LHZ and
covered outright long positions in CC and KC.
Best regards, Myrrdin
A couple ?'s
LCV p100+p106/c136
Did you sell a p100 and a p106 for each c136?
I am not experienced enough understand spreads very well. Examples RB-HO is the trade based on some seasonality in the markets? Then the LHG-LHZ is that based on the difference in price between the months?
Don't mean to ask too many ?'s as I have been reading a couple of the books you recommended. Just slow at reading and maybe haven't gotten that far.
August 6th, 2017, 02:15 AM
Linz Austria
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Commodities
Posts: 1,938 since Nov 2014
Thanks Given: 3,688
Thanks Received: 2,651
TraderGriz
A couple ?'s
LCV p100+p106/c136
Did you sell a p100 and a p106 for each c136?
I am not experienced enough understand spreads very well. Examples RB-HO is the trade based on some seasonality in the markets? Then the LHG-LHZ is that based on the difference in price between the months?
Don't mean to ask too many ?'s as I have been reading a couple of the books you recommended. Just slow at reading and maybe haven't gotten that far.
In the process of legging into the LCV strangle some time ago the LCV P100 got too cheap compared to the LCV C136. Thus, I added some LCV P106. Recently I took profit of more than 90 % on the LCV C136. Currently I am thinking about building a strangle again by buying back some of the puts and selling some calls.
My motivation to buy the RB-HO spreads is the seasonal chart. I will sell them soon as the seasonal window is closing.
Correct, the LHG-LHZ is based on the difference in price between the months. Meat prices for different months trade more or less independent from each other, whereas these prices for many other commodities are closely related to each other. Reason is the difficulty to store meat.
Please feel free to ask as many questions as you have. And ask again in case my answer is not clear.
Best regards, Myrrdin
August 6th, 2017, 09:13 PM
Minnesota
Posts: 89 since Feb 2017
Thanks Given: 178
Thanks Received: 38
Thank you so much myrrdin
August 7th, 2017, 06:16 AM
Germany
Experience: Intermediate
Platform: TWS
Trading: Options on futures
Posts: 155 since Jul 2014
Thanks Given: 341
Thanks Received: 142
I am not sure if this has any consequences for us:
Funds almost tripling US commodities exposure during past five weeks.
August 7th, 2017, 03:09 PM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
Here is an interesting seasonal trade.
LHq last trading day is the 10th trading day of the month. LHv, LHz & LHg usually go up on the 8th through the 10th trading days of the month.
It didn't work in 2014 but that year was abnormally high prices. It didn't work in 2007 and I have no idea why.
It has averaged +1.100 per year the last 6 years not including 2014.
For 2017 this would mean selling late on Wed Aug 9th and buying back Monday Aug 14th.
Even if you are not trading this with futures you could use it to time selling options.
Of course, past performance does not guarantee future results.
August 7th, 2017, 09:57 PM
Minnesota
Posts: 89 since Feb 2017
Thanks Given: 178
Thanks Received: 38
ron99
Here is an interesting seasonal trade.
LHq last trading day is the 10th trading day of the month. LHv, LHz & LHg usually go up on the 8th through the 10th trading days of the month.
It didn't work in 2014 but that year was abnormally high prices. It didn't work in 2007 and I have no idea why.
It has averaged +1.100 per year the last 6 years not including 2014.
For 2017 this would mean selling late on Wed Aug 9th and buying back Monday Aug 14th.
Even if you are not trading this with futures you could use it to time selling options.
Of course, past performance does not guarantee future results.
Call me lucky as I sold my 401 back in. 2007 then. Bouught it back late 08
August 10th, 2017, 06:33 AM
Germany
Experience: Intermediate
Platform: TWS
Trading: Options on futures
Posts: 155 since Jul 2014
Thanks Given: 341
Thanks Received: 142
The latest newsletter from Optionsseller.com
A good overview of Wheat.
They make the case for bearish ZW.
Last Updated on May 26, 2022