*This is for illustration only. Past results are never an indicator of future results. Trading commodity options is risky and not suitable for all investors.
Summary of my Positions 22 May 2019:
Short SEP19 Crude Oil 80-strike CALL for 0.17
Short SEP19 Gold 1500 CALL for 0.70
Short the NOV19 Soybean 1200-strike CALLs for 2.125 cents.
Short the NOV19 Soybean 1100-strike CALLs for 3.0 cents
Short the DEC19 Corn 330 for 2.0 cents ($100.) No GTC outstanding at this time.
Operations Note: The United States of America holiday Memorial Day on Monday 27th May and the markets will be closed. Due to this schedule, the TRADE COMMENTARY will be on Tuesday, 28th May next week instead of the usual Monday posting.
Comments for today WEDNESDAY 22MAY2019:
New Trade Considerations: I will likely hold my remaining five positions over the long weekend coming up. After closing the positions today, I am actively shopping to sell more options in Crude and Gold very soon. And of course, I am looking to sell some strikes on DEC19 Corn. President Trump is scheduled to visit an ethanol refinery in Iowa in a week or two and will pledge to permit year-round sales of high-ethanol E15 blend. For over a year now, this has been in the works to raise the allowable ethanol content of United States of America gasoline from 10% to 15%. This transition will be over time and obviously means more Corn will be used to produce ethanol. This will be no surprise to the corn futures market but still depending on the details of the increase, there is potential an impact on Corn prices. The USA produces about 15 Billion bushels of Corn per year and currently uses about one-third (5 billion bushels) for ethanol production. The E15 will impact demand for crude oil of course over time; so this can’t be bullish for Crude but the price impact is more likely to be over time rather than sudden.
The more urgent news on Corn today, is the speculation that the ‘yield drag’ (reduction of yield) could go as low as 167 bushels per acre (was 176 estimate by USDA) and that a loss of planted acres of 4 to 7 million acres of of corn is possible. Growers of corn will no doubt love to see headlines in reports about this, as it could boost corn prices even higher. These numbers are currently a speculation not fact. I’ll comment more in the next Trade Commentary post on Tuesday. I expect we’ll see lots of articles about these topics very soon. For that reason, I will delay my selling DEC19 Corn CALL options until at least next week and will be following the market closely. This is a follow-up from yesterday’s post about Corn, see: 21May19
Usually the Friday prior to the Memorial Day holiday weekend is light trading in most markets. I wish everyone a safe and enjoyable weekend wherever you are – all the best – Don
The commentary and examples are for teaching purposes only and are not intended to be a trading or trade advisory service. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein on the web site and/or newsletter, are committed at your own risk, financial or otherwise. Trading with leverage could lead to greater loss than your initial deposit. Trade at your own risk. Investors and traders are responsible for their own investment/trading decisions including entries, exits, position, sizing and use of stops or lack thereof. This is not a trade advisory service and is for educational purposes only. The content on the pages here is believed to be reliable - but we cannot guarantee it.