With weather issues impacting grains and world wide events impacting gold and oil, it might be the best strategy to get flat and then look at opportunity next week. We have the Labor Day holiday Monday. A lot of folks are working today and then heading out for a 4 day weekend.
That is my first inclination. There is too much uncertainty to be putting fresh positions on prior to the long weekend.
For the Sep Dec Corn spread sold at 27, we covered those at 18 and 17 and were happy to take that profit.
For the short futures position in CZ from the 570 level, I’d hold those but I am buying cheap calls as a way to lock I profits. If corn takes off higher ( which I don’t expect) we can exercise the cheap calls into futures and then be out of the trade.
My point is that even though I don’t expect it to catch fire and rally, I am not going to dump profits on a trade that has $1.00 into it as a winner. Corn could go to $3.80 and we’ll still be short. buying some cheap 5.30 calls for 10 is a good hedge. We actually bought 5.00 calls last weekend for less than 10 cents which tripled on Monday.. so that was a great way to keep the short futures winner, but buy insurance so the whole thing didn’t go up in smoke.
Again, in my opinion, I’d rather make $$ than be right. In volatile markets, you are going to take heat on almost all positions, but you can at least be intelligent about it, rather than hold your breath and stomp your feet like a 3 year old.
A trade to consider over the weekend. Buy Dec Dow calls and Buy Dec Gold Puts. Its an Anti- Wolf Blitzer CNN hysteria trade.
If , by chance the next ten days do not bring cruise missiles flying in the mid-east, all the war-trade spreads are going to melt like ice cream on a hot day.
Gold looked like it might shoot for 1450, but the clutch was slipping yesterday at 1434. I have some folks short at 1420 with a buy stop above that 34 level. If you don’t want the futures risk, buy the put options.
CER
This is a chart of Dec Dow. We’ve had a 873point down move from the August 2nd contract high down to yesterday’s low at 14,649. If the recent “war spreads” don’t pan out, we are due for a snap back to 1493 or even 15086. I’d buy cheap calls here on that play.