October 1, 2009
The best "2 & 1" I have ever seen?
Short Soybean Oil
I apologize for hammering away so relentlessly on shorting the soybean complex but I have come to view this trade as one of the best setups for the "2 & 1" I have ever seen in this business...The essence of the strategy is that situations do arise in which you can put a wad of money on the table, and due to the inherent volatility of the commodity markets, have what I would call an EXCELLENT chance of getting back 100% of what you've invested if I am wrong...while still having an equally EXCELLENT chance of making two to three times your money if I am right.
On the chart below, due to the now ONE YEAR CONSOLIDATION in Soybean Oil, I think the odds have become enormous that we will see this market move 6 cents, in one direction or the other, between now and next March.
If the move is up, we will be able to sell the call and recoup 100% of our investment.
If the move is down, I firmly believe it will do so in dynamic fashion, and Soybean Oil will basically "plunge" to the low 20's before March goes off the board...At 25 cents, the $3750 unit recommended here would be worth at least $12.000 (two 35 puts, each 10 cents in-the-money).
I also have to point out if this market does continue sideways, and March Soybean Oil is between 35 and 36 cents when the options expire, they would both be totally worthless.
Anyway, here's the chart...The thing I really like most about this trade is that it has a TON of time in which to work...Judge the idea/numbers for yourself and give me a call if you're interested.
FUTURES TRADING IS NOT FOR EVERYONE. THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THERE IS NO GUARANTEE YOUR TRADING EXPERIENCE WILL BE SIMILAR TO PAST PERFORMANCE