10/31/2013

Soybean futures options              Month January of 2014 (53)         ZSF4

Risk: Defined

Buy Jan 1420 call/Sell Jan 1520 call for 4.00 or better the risk is $200 (the contract multiplier is 50)

Maximum profit before commissions is $4,800.

January IV 19%

Open Interest is deep in the January options

On this trade I rolled down the 1420 call and selling it and buying the 1380 call for an additional risk of 3.625 or $181.25 when the futures backed down to the 1263 area. In rolling down you better re-position the trade based on the technical analysis being the same. The risk is increased slightly, but it is a better position and the reward is increased by $1,000 in rolling down.

Trade is now 1380/1520.


Jan.  Monthly (57)

January options still gives the trader 53 days for short covering in the markets which could conceivably happen with soybeans down approximately 35% from their early September HI’s and rallying roughly 38% back from the august LO’s of 1162.5. Above 1310 look for the a run to 1355 area and above there the 1405 area looks to offer the next resistance level with little above that up through the 1450- 1475 area which is around the mid-range where they had been trading from late November of 2011 through late June of this year before plummeting down to the 1150’s.The other technical factor that I see is the initial gap from 185 level hasn't been filled and correlates to the upper resistance areas at the mid to upper 1400’s

*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.