February 4, 2019
There are strong opinions expressed here…and it should be understood that just because I have strong opinions does not mean I will be right…And when I am wrong, you could possibly lose every dollar you have invested…Nevertheless, I will also say that this idea IS where I have my money right now as I think there is NO WAY these three markets are just going to lay here, doing nothing, as we head into their planting, growing, and harvesting seasons.
I continue to believe that owning Corn, Wheat and Soybeans will lead to massive profits during the next 3-6 months.
I continue to believe that all three commodities, at below their costs of production, are at artificially (and temporarily) low prices due to the tariff war…which I firmly believe is nearing an end…And that by the time it does “officially” end…by the time a “deal” is announced…my guess is prices will already be SUBSTANTIALLY above current levels.
Beyond that, I’d also say, with Record World Demand in all three markets, ANY abnormal weather should be explosive for any, or all three, of them.
So, in my opinion, YOU BUY THESE MARKETS NOW…while they are cheap…
Most importantly though, it’s more about the numbers than anything else…starting with the actual option prices…which, due to the last six months of sideways action, are now incredibly cheap.
In other words, the same amount of money buys more options when option prices are this low…
And then there are just the sizes of moves that all three markets routinely have made in the past…
And here are the final numbers…the MONEY.
MY RECOMMENDATION IS TO BUY THE FOLLOWING OPTIONS IN ALL THREE MARKETS…AS ONE “UNIT”…WITH THE TOTAL COST BEING $3494 PER UNIT.
Here’s the point…I think all three markets look loaded and ready to go…but experience has shown me that you NEVER know which of the three goes first, fastest or biggest (if I am right). So it just makes sense to own a piece of each one with the numbers then being:
If all three go nowhere or lower, you will lose everything you have invested.
If just one of them makes it to the first chart level I have noted…which is NOT a big move at all…you will be in position to minimally break even…this is get back the $3500 and still own the other two markets.
And beyond that, there are obviously various degrees of success…which you can easily calculated for yourself, but my personal expectation is that if one is going, all three are going ( to some degree)…and I look for all three to AT LEAST hit the second level I have noted…again, which would NOT be a gigantic move for any of them…but does mean that all of the options would be worth roughly $17,500…
I LOVE THIS BET. I may be dead wrong but I think there is no way we’re still going to be sitting right here, having done nothing on the upside, by the time these options go off the board.
Please give me a call and take a harder look at this.
Thanks for reading,
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Corn, Soybeans, Wheat