Grain and Livestock Outlook
Walsh Trading Commercial Hedging Service is dedicated to providing timely, relevant and quality information. Tim Hannagan, our Senior Grain Analyst provides a weekly Grain Report. Tim has been ranked the #1 grain analyst in the United States per Reuters and Bloomberg for his most accurate price predictions for soybeans and corn in the years 2011 and 2012. Additionally, Mike Bauer, our Senior Livestock Analyst and Ben DiCostanzo, our Senior Technical Analyst provide frequent insights into the Livestock market. Finally, Sean Lusk and John Weyer, Co-Directors of Walsh Commercial Hedging Services provide a variety of insights into the Grain markets.
The Straddle Run
Aug 08, 2013
By Dan Burke, Chief Options Strategist, Walsh Trading, Inc.
The December Corn is currently 461-2 last. The Dec Corn 460 straddle (107 days to expiration) is showing a last value of 49-2. The implied volatility is offered down this morning as the market trades steady. It is my opinion that the bear holds the street and this will give way to more downside.
The November Soybeans are trading 1170 last. The Nov Bean 1180 straddle (79 days to expiration) is showing a last trade of 86-7. The implied volatility is steady as price action continues to give more to the downside. I believe the bear has the street until the next report is published.
The September Wheat is resting 648 last. The Sept Wheat 650 straddle (17 days to expiration) is showing a last value of 23-8. The implied volatility is bid even with the price action moving to the downside again. It is my belief that we will see further downside.
In the last few weeks, I have seen some dramatic downside moves in these Grains. In order to meet speculative or hedging needs, it is my belief that the downside is what needs to be protected. Therefore, I am calling for larger producers to take action by using puts. I would recommend the November Soybean 1020 puts for 5.4 cents, or $270 in cash value. I would also suggest buying the December Corn 400 put for 4.4 cents, or $200 in cash value. Lastly, it is my belief that the large producer will best serve their needs in buying the Sept Wheat 620 puts for 5.1, or $255 in cash value. Please take in mind that funds will need to take some profit before the next report.
For more market information, Dan can be reached at 1.312.957.8248 or via e-mail at email@example.com.
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In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support refers to an area on a chart where buy orders may be clustered. Resistance is an area where there may be sell orders. Fibonacci retracement is named after a 12th century Italian mathematician and based on the theory that prices rise or fall by predictable amounts after reaching a high or low.