Oahu Education - ACE Corn - August 12, 2019

ACE Corn - August 12, 2019

Below is an illustration trading futures options on corn. Our post shows bullish and bearish positions using a combination of call and put options.

Trade Options on Futures

Corn * Directional & Neutral Positions

Get your copy of Paul Forchione's book, "Intro to Advanced Option Spreads" or "Trading Butterfly Spreads". Learn techniques from a professional options trader to manage risk while speculating on futures markets.

Click here to view Paul's eBook

By using our website, you agree to accept our terms of use (click to read)

Entries shown in our Watchlist and MarketPlus do not include commissions and are based on listed settlement prices for reference only.

This publication is intended solely for information purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or solicitation to buy or sell or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any publication is construed as an express or implied promise, guarantee or implication by or from Oahu Capital Group, LLC, Oahu Capital Group (Asia) Pvt. Ltd. that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. All investments are subject to risk, which should be considered prior to making trading decisions.

CFTC regulation 4.41 requires the following disclaimer:

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT , THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCES RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELEY AFFECT ACTUAL TRADING RESULTS.

Term Structure

Volatility

Options fall into the category of being slightly undervalued in non-volatile markets in the weekly options report.

Ask about the Weekly Option's Report for more information or watch our video

zc vol

Notes:

Contract Size - 5,000 bushels (~127 MT)

Tick Size: Cents per bushel. 1/4 of one cent per bushel ($12.50 per contract)

Trading Hours: Sunday – Friday, 7:00 p.m. – 7:45 a.m. CT and Monday – Friday, 8:30 a.m. – 1:20 p.m. CT.

* Tip: Understanding what the numbers mean when looking at Corn prices. The quotation you see is U.S. dollars and cents per 1/4 tick. Each contract you are buying or selling is cents per bushel. A 1/4 cent tick move is $12.50 USD. Options move in 1/8 cent tick or 0.125 cents which is $6.25 USD.

?ml=1" class="modal_link" data-modal-class-name="no_title">* Tip: Click here to read a helpful tip about Corn futures and options

Corn

zc monthly

zc weekly

zc daily

* Tip: To view a larger chart image, simply right click on the image with your mouse. Next, select view image. Be sure to click the back arrow on your browser to go back to the original page.

?ml=1" class="modal_link" data-modal-class-name="no_title">* Tip: Click here on enlarging images

Strategies

Below are illustrations of strategies. Given the upcoming WASDE on Aug 12th, one could trade the outright options. Butterfly trade below would benefit from markets moving rangebound and adjustable. Both the straddle and backspread are not meant to be held beyond the report given time decay and would receive optimal benefit from a large directional price move.

The % yield shown in the diagrams below represent an estimated return on margin from projected dates shown below. The structure has positive time decay which is an advantage over holding outright options.

Long Call or Put

zc 50 delta call