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07 January 2020 Tuesday: Commentary
NEW TRADE TODAY: Last Friday’s military action sent Gold soaring up to almost $1600/ounce and increased volatility of options on both gold and crude. I sold the 1800-strike MAR2020 Gold CALL for 1.40 ($140) this morning.
CLOSING TRADE TODAY: I also covered my short MAR2020 Gold 1350-strike PUT at 0.20 today for a profit of (0.80 minus 0.20) =+$60 each.
CLOSING TRADE TODAY: / closing Purchase of my short 45-strike MAR20 Crude Oil PUT at .04 ($40). I sold it for 0.14 ($140) back on 10th DEC 2019. The profit on each PUT was $140 minus $40 = + $100
Crude Oil: No doubt the airstrike last Friday spiked the oil prices. The chance of another round of military action by either party cannot be ruled out, which adds risk to the short MAR20 70-strike CALL. The MAR20 Crude oil trading 62.41 today, up from 58.70 a week ago (+3.71.) see: https://www.timefarming.com/blog/31-dec19/
see: MARCH 2020 CRUDE OIL short strangle: I sold the 70 Calls and the 45 Puts @ 0.14 for each of then, total of 0.28 ($280.) Trade Date: 10 DEC 2019:
As the story (below) mentions, the most likely outcome is that oil prices drift back down. I covered the 40-PUT today and will consider re-selling it or another PUT if/when prices drift back down.
Investors on Edge After U.S. Strike (News Story)
(source: Article by Kenny Fisher at fxempire.com) The New Year has started with plenty of activity in the markets, as tensions have soared in the Middle East. On Friday, a U.S. airstrike killed Qassem Soleimani, a senior Iranian military commander. The killing has shaken Iran, and the regime has promised to retaliate against the United States. In turn, U.S. President Trump has said that an Iranian attack on U.S. interests would draw a severe response. Although the markets are clearly jittery and the spike in oil prices was to be expected, this could well be a reflex move due to geopolitical uncertainty. In September, U.S. crude soared over 12% after an Iranian attack on a Saudi oil terminal. These gains were erased just two weeks later.Middle East oil is less important to the United States than it was 5 or 10 years ago, as the country has switched to a net exporter of oil. This means that the fallout from the U.S. strike could prove to be temporary, provided that the situation does not escalate with further clashes between the U.S. and Iran. Given the overwhelming military superiority enjoyed by the U.S., the Iranians will have to tread carefully……
Corn: I continue to hold my MAR20 short 365-strike PUT. The underlying trading at 384.50 this morning and this option still priced about where it was sold when the trade was initiated:
I still expect the next WASDE from USDA coming up this Friday, 10th December 2020, to support this position. If you need to see the comment on this trade, look back at the “Trade Origination” tab above; my thinking on placing this trade is there. By the way, here’s the link for the WASDE report at Noon Eastern Time this Friday: https://www.usda.gov/oce/commodity/wasde/
My thinking is that the numbers in this report will support this trade position and keep MAR20 Corn futures well above the 365-strike.
China Trade Deal: Still no firm numbers or actions have yet resulted from the latest trade talks. As I’ve mentioned before, China doesn’t buy any major amounts of Corn from the USA, but their soybean purchases are VERY significant (They are/were by far the largest purchaser of USA soybeans.)
I will be discussing the numbers in the WASDE report next week and will examine some trading ideas based on those numbers. Know that the USDA could delay any final harvest numbers out to the FEB 2020 report (instead of the report this Friday.)
Just a reminder, especially for trial and new subscribers – Check out our Resources page with important links to USDA and other information sources. Also take a look at our free VIDEO TRAINING LIBRARY
Also here’s a link to an early morning ag report video station: Ag Day TV: Early morning agricultural program, Mon-Fri early Eastern time weekday mornings:
That’s it today. Have a great week. – Don
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