09 September 2019 MONDAY newsletter and COMMENTARY
September 9, 2019
Greetings: 09 September 2019 MONDAY
Closed Trade today: I bought back (a “closing purchase”) my short DEC19 Gold $2000-strike CALLs for 0.60. I sold them last Thursday 05 SEP for 1.40 ($140) and closed the trade for 0.60 ($60) this morning for a profit of +$80 per option (not incl commissions.) If you are a new subscriber: Just so you know: The “Trade Origination” gold bar is a link to a post when a position was initiated.
Comments: So why did I take the profits on this Gold DEC19 2000-strike CALLs? It was NOT because I thought the 2000-strike was in danger. It was because the trade offered a quick profit and to stay in the trade would have put this quick-and-nice profit at risk. In other words, I took the money and whispered “thank you.” I do intend to sell more DEC19 Gold CALLs very soon, perhaps this week. MORE COMMENTS BELOW the “Summary of positions”:
Summary of positions as of 09 SEP 2019 MONDAY:
Crude DEC19 short strangles 75 CALL/ 35 PUT strikes. You can see the origination of that trade here:
Short DEC19 Corn 320-strike PUTs at 1.50 cents
Comments continued: Crude Oil: My short Crude Oil strangles (DEC19 75C/35P) only have 67 days until they expire, so time-decay should begin to speed up soon. I am keeping an eye out for a chance to take profits on one side or the other sooner rather than later. Crude Oil inventories are substantial and the daily news cycles pertinent to “the global economy” are still driving both the stocks, gold, and oil up and down almost on a daily basis. In a less volatile market(s), I might be content to just hold this 75C/35P short strangle, but I feel that when I get a good profit on either side, I may just bank it, as I did with today’s short Gold CALL. Since I placed this trade, Crude Oil has moved up from about 54.50 to 57.29, and there is some profit (about +$40) in the PUT side right now and the CALL side is down about $10 this morning.
Corn: My short DEC19 Corn PUT that I sold for 1.5 cents is trading 2.75 cents this morning. As I have commented when I sold it, the USDA’s monthly WASDE (world supply-demand projections) is this Thursday at 12 noon Eastern Time. This report is likely to adjust the corn yield (see the 05 SEP 2019 post for details and a chart.) If there is nothing in the report to raise DEC19 Corn prices, I may have to exit this trade for a loss. I’m not optimistic that a China/USA trade deal will pull Corn prices UP in the short-term (though these days who knows for sure?). I sold this PUT because there is a good chance that this Thursday’s WASDE might decrease the projected yield of the new Corn crop – by reducing bushels per acre and/or reducing the projected harvested acres number. Corn prices have fallen considerably, due to the surprise of a much larger-than-expected production number that was posted in the August WASDE report. If Thursday’s report has a surprise of even larger production numbers than the August report, this trade could be in trouble. Here’s the Kansas State University chart with last month’s (AUG) numbers; this chart is “average to-farm price” for the season — versus—- the Stocks-to-Use ratio. This August report reduced the to-farm average from $3.80 to $3.60 and since then, corn prices have fallen considerably. see chart (below.)
Here’s the DEC19 indicating when prices fell on WASDE last month:
I covered my short DEC19 Gold 2000 CALLs early today. Since then, prices have come down even more. I hope you can (if you chose to put on a position) get an even better fill and more profit than I did.
Good trading to all. This post will serve as both commentary and newsletter today. I expect to have another post or two going up this week. I’ll send out the email notifications if/when that happens. thank you – Don
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