March 14, 2008
I will assuredly be wrong but we are buying cotton again.
We were blindly lucky enough to exit our longs on March 4th and 5th (right into the top ticks) when the options market actually priced May cotton as high as $1.09...then watched the market plunge back approximately 30 cents in the four days following.
I believe the recent action in Cotton is only a prelude to the sort of move that may be coming...that is, some sort of stupidly big bull move far beyond the highs seen on March 5th.
Unfortunately, the extreme volatility has made option prices too pricey to use the "2 & 1" effectively. I am therefore buying futures with an at-the-money put against every contract purchased, thereby defining my risk by whatever amount we spend on the put.
If you're interested, give me a call...I'd also say there is a LOT more going on in futures and I am heavily involved in several other positions that I hope to put on paper in the near future.
Probably wrong but I have to go with what I see...