CORN HEDGE & SELL ALERT
Disclaimer: there is risk of loss trading futures and options. Past performance does not necessarily indicate future results. This is our opinion and should be treated as such.
This alert is not for everyone. So make sure you scroll to see if this is for you as well as some possible strategies you could consider.
Why the alert?
Dec corn is approaching our next target of $5.50 to $5.56
$5.56 is the golden fib. 161.8% from the contract lows up to the May highs.
We are also getting pretty over bought on the RSI. As it’s reaching the highest levels it’s been at.
Obviously this doesn’t mean the market cannot keep pushing higher from here.
But for those short on time, it warrants doing something.
Who is this alert for?
To be clear this alert is not us calling a top or even a pullback in corn. We think corn will ultimately be higher down the road. As we believe there is plenty of potential, especially long term over the next several months.
If you don’t have to move anything soon or are comfortable where you are, we like staying plenty patient. We do NOT want to be oversold in these markets. At all. We want to leave ourselves with a lot of potential upside.
However, for those who lack storage, have to move stuff off the combine, or are behind in their marketing. It makes sense for you to be managing your risk up here in some sort of manner.
It’s not about perfectly timing every high or low, it’s about managing risk where it makes sense.
If you are short on time in your marketing, you don’t have the luxury that someone with time has. It would not be all that hard for corn to see a sizeable short-term correction at all. Given that we’ve ran +90 cents without stopping the last few weeks.
As always, we prefer to use options to give us flexibility in your marketing.
If you don’t like using options, you could consider a small incremental cash sale.
If you have a hedge account, here are some strategies we like:
1) Cash Sale & Re-Own
If you make a sale and want to keep your upside exposure, or if you are oversold and want some more upside exposure, here is one strategy you could consider:
Buy July $5.80 call
Sell July $7.00 call
Sell July $5.35 put
This would give you upside until $7.00. In exchange you could re-own corn 35 cents below today’s price. This would be roughly a zero cost trade but selling options does require margin.
There are several other ways you could go about it, so feel free to reach out if you want to talk. This is just one example of the type of trades we like.
Office: (806)484-1214
Here is a visual of that trade.
2) Downside Protection
Here is another option if you are someone who needs some short term downside protection.
We do not want long term protection until next July for example. As that’s too far out and too expensive.
We want to ride this market higher.
The simplest thing we like to do is grabbing some short-term puts if you can’t afford the market to fall out of bed short term.
For example, you could buy a $5.40 weekly put that expires the day of the Sep USDA report for about 7 cents. Which would give you a floor of $5.33
Again if you have questions or want to talk about what the best move for you specifically would be, feel free to reach out.
Office: (806)484-1214
Want to Talk?
Our phones are open 24/7 for you guys if you ever need anything or want to discuss your operation.
Jeremey & Office: (806)484-1214
Sebastian: (605)280-1186
Email: sfrost@dailymarketminute.com
Hedge Account
Interested in a hedge account? Use the link below to set up an account or give us a call.