10/24/2013 Thurs

Corn Futures          ZC

IV  Mar options  23%    ZCH4

      Corn futures appear to have consolidated between the 435 and 450 range over the past couple weeks. I would look to get long the Mar options on any weakness from here. Minor retracement of 23% comes in around the 528 level and 590 is the 38% retrace from the move down from 849 hi back on 8/10/2012 to the 432 area a move which represents a 50% price decline.

      Look at the 490/540 call spread in Mar which is currently trading for around 6.75. If you can pick the spread up for 6.50 or better the risk is minimal at $325 with a potential reward of $2,175. Margin on the spread is only $425. That positions the buyer for a rally back to the 500 area and a further move to where the futures gapped down to at the 550 level back in late June. Even if the futures were to rally to the 505 levels and fail the spread would probably trade up to the 15 to 25 point range depending on both time and volatility at that particular point.

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FINRA licensed professional.