TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
OPTIONS PLAY: SOYBEAN PULL-BACK COULD BE AN OPPORTUNITY
JANUARY SOYBEAN FUTURES CLOSED 15 CENTS LOWER TODAY MONDAY 12/2/13, THAN THEY DID ON FRIDAY, 11/29/13.
Fundamentally, last week we saw the very trustworthy Chinese grain buyers back out of a 300,000-tonne purchase. This is very important in terms of price direction since harvest is pretty much complete here in the U.S. and now demand and South America will be in the forefront for fundamental news. Despite this cancellation by the Chinese, the export report Friday showed Soybeans were ahead of pace according to some analyst by 330 million bushels. That is why I believe that the USDA will be forced to raise export expectations. Even though China is our biggest importer, they are not the only importer of U.S. Beans. My advice is be very leery of any Chinese Soybean purchases from the U.S. until the deal is done because initially on the announcement of a purchase we have seen the market move only to have the Chinese cancel orders.
For our report on options on beans for people who don’t know beans about options click here: http://www.zaner.com/offers/?page=8&ap=mmckinne
Technically, I have placed several indicators on this daily January SOYBEAN chart. They are the 9, 20, and 50 day SIMPLE MOVING AVERAGES (SMA’S), the BOLLINGER BANDS (BB’s, light blue shaded area), VOLUME, and CANDLESTICKS. The first item that I notice from placing these indicators on the chart is the cross of the 9 day SMA (red line) over the 20 day SMA (green line) back on November 15th as the 9 day SMA (red line) finally starts to point higher on a fairly sharp angle and the 20 day SMA (green line) has also started to point upward all the while the market itself is trading above the 9 day SMA (red line). This is to me want I have coined a “SUPER-TREND” up. I also notice that the market over the last several days has made higher highs and higher lows.
I also notice after applying my favorite technical indicators to this daily January Soybean chart that this market is somewhat over bought for the following reasons:
1. The market is very close to the top line of the BB’S (BOLLINGER BANDS, light blue shaded area) which I consider the last area of resistance.
2. The market is also trading well above the 9 day SMA (red line) which is the first area of support in my view. Typically the market could pull back down to that area and hold, only to go on and make new highs if it is real support.
-However, I am of the belief that markets can remain over bought for long periods of time, particularly if the market has strong upside momentum.
Moving Average Formulas and Strategy Guide: http://www.zaner.com/offers/?page=3&ap=mmckinne
Since, I am now bullish on this market there could be several ways to play this market with options and one could be to buy straight call options in a 3 to 1 ratio with a put for a hedge or “insurance” in case I am wrong and the market rallies. Another potential play could be to sell naked options or option spreads again with protection maybe in the form of a futures contract or with other option plays. Remember, when you sell naked options you have unlimited risk and should have a “well funded” account of risk capital. For exact details on months, expiration dates, strike prices, and number of positions feel free to contact me. firstname.lastname@example.org
FREE QUOTE- “The trend is your friend.” -Anthony Columbo
25 Option Strategies: http://www.zaner.com/offers/?page=11&ap=mmckinne
FUTURES, OPTIONS AND FOREX TRADING IS SPECULATIVE IN NATURE AND INVOLVES SUBSTANTIAL RISK OF LOSS. THESE RECOMMENDATIONS ARE A SOLICITATION FOR ENTERING INTO DERIVATIVES TRANSACTIONS. ALL KNOWN NEWS AND EVENTS HAVE ALREADY BEEN FACTORED INTO THE PRICE OF THE UNDERLYING DERIVATIVES DISCUSSED. FROM TIME TO TIME PERSONS AFFILIATED WITH ZANER, OR ITS ASSOCIATED COMPANIES, MAY HAVE POSITIONS IN RECOMMENDED AND OTHER DERIVATIVES.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERDLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION’S STICKE PRICE COMPARES TO THE UNDERLYING FUTURE’S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT OPTIONS PRICES MAY ONLY MOVE A LITTLE.
THE LIMITED RISK CHARACTERISTIC OF OPTIONS REFERS TO LONG OPTIONS ONLY AND REFERS TO THE AMOUNT OF THE LOSS, WHICH IS DEFINED AS THE PREMIUM PAID ON THE OPTION(S) PLUS COMMISSIONS.