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| 5 Hot Picks by John Garrity of Manduca Trading |
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Since his arrival in Futures and Options in 1995, John Garrity has served as an equity raiser, currency analyst, and has trained hundreds of clients in the art of trading. Mr. Garrity provides all of his clients with a fundamental and technical analysis on various markets by writing a daily Garrity Report that is e-mailed twice each trading day. Mr. Garrity comes from a family with over 30 years of experience in the agricultural markets. His Father trades at the Chicago Mercantile Exchange in the Meats. |
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The question of the year: Where’s is the top? How do I pick a top and not worry about being stopped out? Here’s an option strategy that has limited risk and unlimited potential. Sell the June Dow Jones 130/132 Call Spread for a credit of about $1000. Buy the June Dow Jones 130/put for about $1,250. Your total cost on this trade is $250. Your worst case scenario is if the Dow Jones settles above 132 at June option expiration you will lose $2,250 per strategy. Let’s say the Dow Jones closes at 12000 at Option Expiration. You will be in the money on the 130/put by $10,000. You will get $9,750 per strategy. |
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How low can it go?? The Sugar market has fallen from about 1950 a little over a year ago. This is over 50% of its value! If the Dow Jones lost 50% of its value it would be at 6500! How do we take advantage of this? July Sugar is trading around 950. Here’s an idea: Buy the July future around 950 and also buy the July Sugar 950/put for about $370. Your total risk is the cost of the 950/put. You have until option expiration for this market to turn. Let’s say July Sugar rallies 50% of what it lost over the last year. This would put the July future around 1450. I also see a gap to fill at this level. You would make a profit of about $5200 per strategy. This is a 14 to 1 Reward vs.
Risk. |
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If they are going to plant much more Corn this year and much less Soybeans, what should happen to prices? Corn prices should go lower and Soybean prices should go higher. If we buy Soybeans and sell Corn we should buy and sell new crop. December Corn and November Soybeans are new crop. The November Soybean/December Corn Spread is currently around $3.92 premium to November Soybeans. I see support on this spread at $3.77 premium to November Soybeans. This would be a risk of about $750 per spread. This spread was as high as $4.57 about 3 weeks ago. If this spread retests this high you would be up about $3,250 per spread. Are Soybeans going to be the Corn of last year? |
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WOW, what a drop in prices the past couple of weeks! I don't see the price of Orange Juice going down at the supermarket. Isn't Hurricane season right around the corner? I think it might be a good time to simply buy Call options. If you buy a Call option you have unlimited potential and limited risk. The July OJ 180/call is about $200. The September OJ 180/call is about $450. The November OJ 180/call is about $675. |
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It looks like Live Cattle prices are weakening. I want to go short, but I don't want to be very aggressive. Technically in the short term it looks bearish, but over the past few year's Cattle prices have been going higher. Here's a Intra-Commodity Spread that is usually more conservative. Sell June Live Cattle and buy October Live Cattle. The spread is currently trading around 212 premium to October Live Cattle. I see resistance around 62 premium to October Live Cattle. This would be a risk of about $600 per spread. Let's say Live Cattle breaks the bull trendline and prices fall sharply. This spread widens to 800 premium to October live Cattle. This would be a profit of about $2400 per
spread. |
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| 5 Hot Picks by Boyd Cruel of Alaron |
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 Boyd Cruel joined Alaron in 1996 and has been the firm's principal Soft Commodities analyst sine 1997. Boyd's highly regarded research and analysis covering the soft commodities -- coffee, sugar, cocoa and orange juice -- appears daily at www.alaron.com. The New York Board of Trade, the dominant exchange for soft commodity futures, also distributes his research reports both to private clients and industry professionals. A favorite of the financial press, Boyd has been quoted extensively in the Wall Street Journal, Futures Magazine, Investor's Business Daily and other financial publications.
Boyd works with individual clients, money managers and system developers, advising them and helping them to execute complex trading strategies. He is also part of Alaron’s Futures Training Division, which specializes in educating novice, intermediate, and professional traders.” |
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The coffee market is entering the period when prices have the seasonal tendency to move higher. The reason why prices move higher is because a weather premium gets built into the market ahead of the Brazilian winter. Prices have been in a downtrend since the beginning of the year. The July contract pushed to a low this month of 110.90. The longer-term trend for this market is higher as we are expecting a smaller Brazilian crop. The time frame for this seasonal trend is between mid-April and mid-May. Look to buy a June Coffee 120/call or look to buy futures between 110.00 and 110.50. |
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OJ prices dropped to a 10-month low this week on continued fund and speculative selling. Prices have dropped almost 4200 points this month. This sell-off has been technical in nature as the market has not gotten any fresh bullish news. Prices are really undervalued at these levels as a Florida crop of 130.7 million boxes has been estimated by the USDA and notably, the 60-70 cent premium the cash market has over the futures market. In addition, the new Florida crop will have to get through the hurricane season, which runs from June through November. Look to buy the July OJ 170 or 180/calls. |
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Sugar prices have been in a downtrend since making a 25 year high in February 2006 of 19.73. Prices have been pressured due to the abundant supplies and the weakness in the cash market. In the last few weeks, the upside has been limited as Brazil is currently harvesting their large crop. I will be looking to start building a long position if we can get a push down to 9.00-9.10 basis July. Look to buy the July 9.50 or 10.00 call. |
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Cotton prices have fallen to new contract lows this month. Prices have been weaker since the beginning of the year as the highly anticipated strong demand from China never came through in the 1st quarter. However, our weekly export sales have been showing some strength in the last couple of weeks. In addition, planting acreage for this market has been reduced. Look to buy the July 52/calls or buy futures between 50.80 and 51.25. |
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May Beans pushed to a new monthly low this week. Prices have dropped over 70 cents this month. The trade has been long the corn and short the beans. We could begin to see an unwinding of this spread, which should push bean prices higher. Bean acreage was reduced in last month's USDA Prospective Plantings Report, which should provide some underlying support to this market. A majority of the beans will begin to be planted in May and weather will become more of a focus. Look to buy July 760 or 780/call options. |
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