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.
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