Greetings: 19 November 2019, Tuesday
Commentary today: The USDA Crop Conditions report for this week (came out yesterday 11/18/2019 Monday) noted the progress of the Corn new crop harvest is 76% versus a most recent five year average of 92%, and this progress is behind the number from last’s years report of 89%. What this suggests is that there is, as has been discussed, a good possibility that fewer acres might be harvested than the number posted in the monthly WASDE reports. Yesterday’s report is at this link: PDF Download free
Some commentators on AgWeb are saying it could be the JAN20 WASDE report before we get a ‘real number’ of actual harvested acres from the USDA. You may recall floods in the spring and delayed planting caused much speculation of a smaller production for this new crop. You can look at the most recent WASDE (NOV19 HERE) As I commented last week, I would like to sell PUTS on the MARCH 2020 Corn, but I need a little more information before pulling the trigger on this one. March 2020 Corn is up 4.75 cents today, probably the reaction from yesterday’s report. This morning the 350 MAR20 Corn PUT is trading only 1.50 cents and the contract is at about 382, a little closer than I like for the small premium. So I’ll keep watching.
Crude Oil: I continue to hold my only current open position today, my short FEB20 Crude Oil short strangle. I sold the FEB20 Crude Oil 40PUT and 75CALL for 0.14 ($140) last week. I continue to hold this position and will also be shopping for more premium out in the mid year 2020 futures options soon. You can see the chart in last week’s post on the Trade Origination button:
Gold: I shopped to sell a MARCH20 short strangle this morning: A 1300-PUT and 1900-CALL, the premium available was a combined $140, but the 1900 CALL only has 236 OI (outstanding issues), while the 1300 had over 3200. I may take a look again soon, but no trade today. This Gold chart (it’s of FEB20) shows the extreme volatility of gold prices since April this year. This was a period of time when the DJIA/ S&P500 / and NASDAQ100 were very volatile and resulted in huge moves in Gold prices, as money flowed to gold in the ‘safe haven’ effect. This makes me cautious to sell PUTs or CALLs for now. I’d like to see a larger price move either UP or DOWN from present prices.
I was hoping, this morning, to go out to MAR20 Gold to sell options, but tomorrow I will examine the FEB20 and compare strikes and premiums there to try and find a better deal with enough OI. Just so you know, a small OI (open interests) can cause problems when one has to get out of a trade quickly; it is common knowledge that high OI and daily volume are required to get efficient (fair) prices. Since the stock market has the potential to move gold prices quickly in either direction, I think this caution is necessary at this time.
That’s it today. Have a great week. – Don
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