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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.

What are China's Plans for the Holiday?

Dec 19, 2013

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.        

At times it has been suggested that China likes to manipulate grains markets to their advantage (you don't say?)  And, the times that it is easiest to do so are thinly traded holiday sessions.  So, as we get set to spend some quality time with our families I wonder what China's plans are.  

Is China going to swing by my house for Christmas?  Only if I make the Ham you say?  I jest, but actually I did have a Chinese exchange student at my house for thanksgiving.  On black Friday he went and bought 82 pairs of Nike shoes to take home and sell to his classmates.  Ever the opportunists I thought to myself.  Its a big part of the culture.  So now I'm wondering what sort of opportunities China is looking to capitalize on during the next two holiday weeks.  

It would occur to me, that if I was devious enough and in a position to do so, I could put on a massive futures and/or options position and then make some sort of announcement to make the market go in my favor.  It would certainly be easier to do this in lower volume, choppy markets.  So, If you are a big soybean trader in China you might be thinking to yourself - "the South American weather looks favorable, so I am going to sell soybeans, sell calls, buy puts and then announce that I am canceling 30 cargoes of US soybeans and see if the market breaks 30-40 cents".  Hmmm, again if I were so inclined and in a position to do something of this nature I suppose I would be dreaming sweet dreams thinking about the weeks to come.  

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

Now some people would say if this were to happen it would be almost criminal.  In reality it's not.  Personally, I have absolutely nothing against China.  If anything I would like to say thank you for buying so much of our grain.  However, I do recognize some of the differences in our cultures.  There is really no right or wrong here, just differences in culturally acceptable practices.  It's best not to fight over which culture is better or more just.  Everyone is obviously going to be more partial to their own.  Its better to understand other cultures and prepare for how they may act.  

Have a safe and Happy Holiday everyone!  

Feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.     

March Corn Daily chart:

January Soybeans Daily chart:

March Wheat Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. 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

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

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

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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