Hello TZP members
Soybeans
We’ve yet to be filled on our open order to sell the July 2010 soybean $8.60/$8.80 put option credit spread for a limit spread sell price of 8 cents per spread, GTC (good-til-cancelled), as an opening transaction.
The spread is worth about 5 cents currently as the July futures contract has traded slightly higher since first recommending the trade. With put option spreads, they will get cheaper as the futures move higher. This is the reason why we have not been able to get filled at our target price of 8 cents. We continue to need the soybean futures to drop a bit more in order for the spread to reach 8 cents.
Continue to work your order at 8 cents.
Click here for chart.
Crude Oil
I’ll tell ya, the crude oil futures market is one of the most resilient and volatile of all the markets I watch. As it dropped below the widely-watched 200-day moving average line last week, it looked as though it could hit much lower levels. But it has bounded higher again by roughly $9 per barrel. Amazing. Check out the link below, which shows the daily chart of June 2010 futures.
Our neutral-bullish put option credit spread in the crude oil market is working to perfection now as oil heads higher.
Just as with soybeans, put option spreads get cheaper as the market moves higher.
Since we originally sold the spread at 15 cents, it has now fallen to 10 cents. This gives us an unrealized profit on the trade and we’ll look to possibly buy it back when it hits single digits. This spread trade is working out exactly as our last crude oil put option credit spread that we did not long ago did – we sold it at one price and bought it back for a gain.
Continue to hold.
Click here for chart.
Sugar
As mentioned last week, it looked like our bearish March 2010 sugar put option spread would expire worthless when it goes off the board, and that’s exactly what happened this past Tuesday. Unfortunately, we took the full loss on the trade. If you were holding this trade, then you should no longer see the position in your account.
Regards,
Lee Lowell
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