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
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Term Structure
Volatility
Options fall into the category of being slightly undervalued in volatile markets in the weekly options report.
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
Interesting seeing how corn prices stand now in relation to prior years dating back to the 1970s.
* 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
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.
Iron Condor
Below is an illustration an iron condor where the position benefits from a decline in implied volatility. Implied is currently below statistical volatility though in the 92nd percentile. Both spreads have positive time decay.
Below is a calendar spread with an edge if implied volatility were to increase.
The last illustration is a Ratio Backspread with Calls
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