13 November 2019 WEDNESDAY newsletter

Greetings: Wednesday 13 NOV 2019:

New Trade this morning: Short Strangle Crude Oil FEB20.  I shorted the 75-strike CALL and the 40 PUT for a total of $140.  I got 0.06 for the 75 CALL, and got 0.08 for the 40 PUT, a total of 0.14 ($140).

The initial margin requirement was: $1100, the underlying FEB20 was trading at $57.04 per barrel.
The Prob OTM at 97%.

Comment:  No shortage of crude oil and it seems and no immediate threat to supply, the price may continue in the recent trading range.

Corn: The November WASDE report from USDA show corn ending stocks, yields, and usage with minor changes and the average to-farm price increased from $3.80 to $3.85 per bushel.  There are reports of difficulties in drying stored corn due to propane shortages and wet weather, but so far – this has had little or no impact on prices.  Any USA/Tariff agreements will affect soybeans much more than corn, still there is room for improvement in projected exports for 2020.  The WASDE report NOV19 is at this link: https://www.usda.gov/oce/commodity/wasde/ 

My next Corn Trade will likely be selling PUTs on the MAR2020 Corn Futures.  The pending trade talk agreements are supporting prices at this time, but as harvest progresses, I expect the MAR20 Corn futures to be lower than today’s price at 385.  As the 15 year average chart (below) suggest lows come in OCT, I feel the trade talks have not yet allowed for a lower prices, basis the MAR20 futures.  The DEC 2019 WASDE should help drive prices down more as a successful harvest is confirmed.  Last year, the low’s for the MAR2018 Corn Futures hit a low of  near 346 on December 17, 2018.

source of chart:  Seasonal Commodity Charts – Designed by Mother Nature by Don Singletary (Amazon link)

Gold: I am shopping to sell a 2020 short strangle on Gold futures but with the stock market at an all-time high and politics still driving the headlines,  the next major direction for stocks is a little too uncertain for now.  I will be watching closely this week and next to see if volatility increases a bit and I’m still shopping for the short strangle and expect to find it soon.

That is all today have a great week. – Don

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