September wheat traded at 4.55 on June 29th, the day before the Acreage report. 27 trading day’s later on Aug 6th, Sep wheat topped out at 8.41.
Today’s low at 6.49 3/4 was just one cent above the pure 50% retracement of this 27-day, 3.86 cent spike higher.
The next support is at 6.03 1/2, which is a 62% retracement of this 27-day, 3.86 point upmove.
The six dollar puts we held onto are back in the money. the 6.30 puts we paid 19 cents for, today are worth 30 cents. A 50% return on invested funds.
Can it go lower? sure, could it rally back if Russia started squawking again about their drought? Sure. But the bottom line, is the trade was well executed. Half the position should be covered for the winnings. The other half, we will manage with a trailing stop.
Too bad they all don’t work out this well. I will re iterate, however, that the kiss of death to the rally was the mass media’s attention on the problems in Russia.
This week will be a great defining week for new crop Corn and Beans. The Beans need to settle above the 10.50 level. CZ settled today right at the 4.30 level. We have to settle above that level, preferably for the week.
A settlement above 4.30 opens the door for a rally back to 5.50.
Good Trading