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Sept. 28, 2005
Sell December Soybean Oil
I think Soybean Oil is about to roll
off a cliff. On the chart below, you will note it has been
around the 22 cent level over and over and over during the past seven
months. I believe the move up to the 26 cent area was something of a "fake
out break out" and, having returned to the 22 cent area, the last thing it
is going to do is hang around here for long at all. My guess is a crack
through 22 cents is imminent and a rapid move will then take place down to
new contract lows (at least). If it doesn't break, I think it will easily
make a run back up through 24 cents. This is, to me, the "perfect 2 and 1"
in that I firmly believe "it won't stay here" and most likely will make a
solid move in one direction or the other.
I am buying "units" of two 22.00 puts
with one 22.50 call as insurance with a total cost of about $1230. If I am
right, I believe this position has a solid shot at roughly a triple. If I am
wrong, I also believe there is a strong possibility of recouping 100% of
your investment. Obviously, if Soybean Oil just sits here for the next two
months, you could lose money on both sides of the trade.
Give me a call if you are interested.
Thanks,
Bill Rhyne
800-578-1001
770-514-1993
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