Jul 10, 2014
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The Ted Spread

RSS By: Ted Seifried, AgWeb.com

Ted is the Chief Market Strategist and Vice President in charge of the Zaner Ag Hedge Group and specializes in agricultural hedging employing various strategies using futures, futures spreads, outright options and option combinations. He believes it is paramount to be able to use different strategies to adapt to market conditions. Ted works with large to mid size grain and livestock producers and end users in North, Central and South America.

Grains Rally Alongside Markets on Election Day

Nov 06, 2012

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS 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.   

Corn and Soybeans had a mild bounce today ending a 3-day slide.  Fundamentally there was little grains news to support markets this morning and this bounce was mostly fund driven and technical in nature.  December corn held $7.32 for the fourth time yesterday and soybeans were able to hold yesterday's lows triggering some light profit taking early.

Sign up for our Morning Ag Comments: http://www.zaner.com/offers/?page=17

The big story of the day is the presidential election.  As the day went on there was significant fund buying in many markets in anticipation of an Obama victory.  Crude oil at one point was up well over $3.00 a barrel, the DOW was up over 150 points, gold over $30.00 an oz higher.  This overall warm and fuzzy feeling did, to a small extent spill over to the grains as well.  The idea here is that another 4 years of spend happy Obamanomics will continue to put pressure on the US dollar and therefore support commodities and stock markets.  This all remains to be seen as first of all the election is not over yet and a swing in poll tallies could swing markets the other way.  And secondly, I have to wonder if President Obama is indeed elected if the market is setting it self up for disappointment as it seems unlikely that he will be able to add the same amount of stimulus to the economy as he did in his first two years now that he has a mixed congress.

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=tseifrie

Soon enough we will go back to trading grain fundamentals as we gear up for what looks to be the most impactful USDA report in years on Friday morning.  This report will be the final USDA report for row crops and will likely see changes in yields, planted acreage and harvested acreage.  We will be taking a closer look at expectations for this report on Thursday afternoon, hope to see you then...

With high volatility in a market, option strategies may be a good tool for hedgers and specs alike.

 

December Corn Daily chart:

January Soybeans Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices while we have new crop corn above $7.00 and new crop soybeans above $15.00. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent.

Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs.

Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Please check out my Blog at: http://tedseifriedfutures.com/

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=Seifried

 

Futures, options and forex trading is speculative in nature and involves substantial risk of loss.  This commentary should be conveyed as a solicitation for entry into derivitives transactions.  All known news and events have already been factored into the price of the underlying commodities discussed.  The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.

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 UNDERLYING 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 STRIKE 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, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION

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