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Do you take the FED remark into any account?
What Yellen just said would support the case for inflation.
Do you think that makes higher prices for commodities more probable?
I do suffer a bit of information overload?
Thanks.
Can you help answer these questions from other members on NexusFi?
Yes, inflation and moves of the currencies do influence prices for commodities. But for me these influences are of less importance and difficult to predict for the next couple of months. I do not consider them when selling options in the grains.
What do you think about selling cattle calls? I'm new to this but: there's a chance that supply will increase due to the heat. Producers may want to sell ready cattle now instead of potentially incurring higher operating costs (higher feed costs, etc.) In the short term demand may also decline due to the heat. Our bodies need fewer calories to maintain normal temperatures when it's hot outside.
This would be a short time trade, using the August contract. Dave Hightower suggested this trade. I prefer selling options with 90 to 150 DTE.
Regarding cattle, I hold the LCV P100/C136 strangle for some weeks. And I consider to sell LCZ puts at lower prices of the underlying during the next couple of weeks. In my opinion cash price in December should be above $ 120.
An additional remark for the ones new to trading the meats:
the individual contracts for different months trade more or less independently from each other. This is different to other commodities futures. The reason is that it is difficult to store meat for a longer period of time compared to grains, coffee or metals.
Live Cattle futures are limit-up today, and the trade suggestion mentioned above is stopped out on the day of entry.
This is a good example, why it is not wise to enter short options with only 20 DTE. Although it is tempting - you can make a lot of money within a month. But you can also loose a lot of money withinin less than a day.
Best regards, Myrrdin
PS: I am still waiting patiently to enter the LCZ puts ...
After the report yesterday, ZC is markedly down,and the outlook seems to point to a further sell off.
"USDA now expects the 2017 corn harvest at 14.25 billion bushels versus its previous 14.065 billion. It cut 2016/207 feed use 75 million to 5.425 billion bushels but raised 2017/2018 feed use by 50 million to 5.475 billion. For old crop it left exports and industrial use, including ethanol, unchanged."
It also seems to be in-line with the seasonals.
I am planning to sell ZCZ17 calls today or tomorrow.
I might sell corn calls if - after a warmer and / or drier weather forecast - corn prices and volatility move up again next week. But currently calls look too cheap for me. If there is no such chance I will stay without corn calls at the time being.
The only position I hold in the grains & beans is a WH9-WN8 spread from -18 c. This spread has not moved above 0 for many years. It should move further downwards when farmers begin talking about their planting intentions in fall.
Are you planning to get back into NG?
I still have the NGU7p250 from a Strangle, but will hopefully close it this week. Bias currently seem to me to be to the downside; I am considering a new strangle with a lower put then.