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March Corn

Consider going long March CORN on a dip this week down to 411^0 with a risk below 399^0. Target on Corn is 430+. There is a continued buildup of Corn's open interest by funds and that is very positive. Also supporting the corn market is the fact small speculators and producers continue to increase their short position. The USDA crop production and supply/demand report comes out Tuesday morning.

March Wheat

The March WHEAT closed limit up on Friday with worldwide wheat supply concerns. Small traders and trend-following funds still hold big short positions in spite of the sharp run up in wheat prices last week. Dry weather worldwide, dwindling world supply, and continued strong demand should continue to send wheat prices higher. Consider going long March Wheat 1050 calls at 23 cents this morning with a stop in at 9 cents. Due to volatility and grain report out tomorrow morning, options seem the most feasible play right now.

February Gold

February GOLD has already rocketed up $15 higher this morning to $815 as traders are looking for the FED to announce a 25-50 basis point cut at tomorrow's FED meeting. Consider still going long Feb Gold, although it will now have to be on a decent dip in prices back to the $800-$803 area, risking the trade down to the $793 area. Look for a stock market drop tomorrow after the rate decision, and that should be enough to bring gold back down into the $800-$803 area again. Look for the Feb Gold to test the $830 area. Consider building a position by starting with the mini Gold first.

January Soybeans

In the January SOYBEANS, can you say "Beans in the teens"? Well, it is not so far fetched right now. Here we are, weeks away from the New Year, and the Jan Beans are trading well over $11.00 a bushel! Consider buying the Jan Beans on a dip this week, using the low 11.00 area (1103-05) as a support zone for stops. Again, more aggressive traders may want to risk the trade below $11.00. $11.40 is the next target up for Jan Beans.

March E-mini S&P

Like the Gold, we feel it is just a matter of time before the Stock market resumes it path, in this case lower. Look to sell rallies in the March E-mini S&P (rollover is this week) as close to 1540 as possible, risking the trade on stop above 1550.50. Look to target the trade down to the 1503.00 area (40 day MA). With the Fed meeting tomorrow, less aggressive traders may want to stay on the sidelines until after the announcement.

Futures and options trading involves significant risk of loss. No assurance of any kind is implied or possible where projections of future conditions are attempted. Past results are no indication of future performance. All investments are subject to risk, which should be considered prior to making any investment decisions.

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Corn

Corn has taken out contract highs and it looks as though $5.00 could be in reach. I like a Bull Spread, buying March Corn (CH8) and selling December Corn (CZ8), currently around 23 cents premium to CZ8. The risk on this trade should be about 10 cents, or $500. If Corn heads to $5.00, the front month March in my opinion should jump over December. Generally in a Bull market the front month is higher priced than the deferred months. For example: look at Soybean prices or Wheat prices. Let's say by the end of January March Corn is trading at $5.00 and December8 Corn is trading at $4.80, this trade would be grossing about 43 cents on this spread or about $2150 per spread.

Sugar

May Sugar (SBK8) looks like it could be breaking out of a bear trend. I see the trend line coming in around 1040. Are the May Sugar 1100/calls only $200?? These particular options look like a steal at only $200ish to risk. Sugar is one of the few Commodities down on the year. Sugar prices were trading around 1900 January of 2006 and as low as 850 back in June of this year. If May Sugar breaks the bear trend line, I see 1405 as an approximate 50% retracement. An 1100/call would be worth about $3400, not a bad Risk vs. Reward.

Eurodollar

What is a Eurodollar? A Eurodollar is the Interest Rate on the US Dollar deposited in European Banks. There is a 2 day FOMC meeting this week. We will probably see a cut in Interest Rates. The Bonds, Notes, and Eurodollars will be greatly affected by this. How do we take advantage of this?? I think buying a Strangle will cover both sides in case there is a large move in prices. The June Eurodollar (EDM8) is currently at 9605. The EDM8 9650/call is $300 and the EDM8 9550/put is $200, expiration is in 190 day's. You could buy the EDM8 9650/9550 Strangle for $500 premium and risk and open yourself up to unlimited potential.

Orange Juice

Orange Juice is also one of the few Commodities down on the year. July Orange Juice (OJN8) is currently trading around $1.44/lb. I think Juice prices are going to head higher next year. What about selling the OJN8 140/130 Put Spread for a credit of about $700 and using that credit to purchase the OJN8 160/call for about $1400? The cost of this strategy would be about $700 not including commissions and fees. You would have limited risk of $2200 and unlimited potential. Hypothetically, let's say July OJ goes back to $2.00/lb., and if so then the trade would gross about $6000 per strategy!

Cotton

I like the looks of the upside to this market. I like a bull spread: Buy the March8 Cotton (CTH8) and sell the March9 Cotton (CTH9) around 1000 premium to CTH9. This spread is very similar to the Corn Spread above. It looks like this spread is getting ready to turn. I see risk of about 150 points or $750 per spread and possible potential of $5000 profit or Even $. The March Cotton 70/calls are only about $250 cost and risk.