October 19, 2005
I am VERY bullish the Cotton market. It has backed up the last three days and I consider this a tremendous opportunity to enter this market as a buyer....If I am right, and cotton is going up, I think it will extend FAR beyond the recent highs at 60 cents (see chart below). For this reason, I am recommending the purchase of slightly out of the money 60 cent calls which closed today at $865 each.
If it's going, I REALLY think it's going and can tell you that 15, 20 and 25 cent moves are NOT uncommon in Cotton. Maybe I'm wrong, but I believe this is the most undervalued commodity on the board, and, short of some sort of world wide economic collapse, can't imagine it being anywhere near these very low levels 6-8 months from now....
I guess I can't make it any clearer than that....
Call me now, into this recent weakness, if you want to take a look at some numbers....
In the past few months, Cotton has moved up 7 or 8 cents while everybody is talking mostly about nothing other than, "the big crop". This, to me, is quite meaningful.....