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Diversified Option Selling Portfolio
Started:September 6th, 2015 (11:22 AM) by myrrdin Views / Replies:26,203 / 581
Last Reply:December 2nd, 2016 (01:20 PM) Attachments:38

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Diversified Option Selling Portfolio

Old June 6th, 2016, 01:16 PM   #241 (permalink)
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Liquidated the LHQ and LHZ calls at a loss of 120 % (Q) and 20 % (Z). I do not understand what is going on in the hog prices. S&D is clearly bearish.

Bought the LCQ-LHQ spread instead, which looks very favourable from various viewpoints (S&D, seasonals, has reached support at 30).

Target: above 40.

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Old June 6th, 2016, 02:40 PM   #242 (permalink)
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Bought back the LHN P78 with a profit of approx. 80 %. Most of the potential profit is made, and the price of the futures does not follow my understanding of the fundamentals. Time to get out.

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Old June 6th, 2016, 05:26 PM   #243 (permalink)
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How about selling Corn calls?


Corn also reaching extended levels. and getting into a period for seasonal correction
Of course vol is high with WASDE but how about right after

Thought?



myrrdin View Post
Sold the WU C6.

Wheat prices moved upwards with the move down of the USD, but fundamentals (weather, S&D) are very bearish. Severe weather problems in one of the major wheat producing countries of the Northern Hemisphere would be necessary to turn the outlook bullish.

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Old June 7th, 2016, 02:36 AM   #244 (permalink)
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jokertrader View Post
Corn also reaching extended levels. and getting into a period for seasonal correction
Of course vol is high with WASDE but how about right after

Thought?

Corn reaches the critical pollination period in July. If weather cooperates prices will come down. In case it gets hot and dry prices will move up sharply. Volatility is not only high because of WASDE, but also because of the near pollination period. It might stay high until weather forecasts are known for July.

For wheat the harvest is beginning. The crop is almost made in the US, and not far from being made in Europe.

The problem for wheat: Corn and (cheap) wheat both are used for feeding. If corn moves up wheat moves up, too. But not that fast.

The good thing for wheat: Wheat is grown around the world. In case of weather problems in the US other countries might help. The US percentage for the world-wide crop of corn is much higher than the US percentage for wheat.

Thus, I prefer wheat to sell calls.

Best regards, Myrrdin

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Old June 9th, 2016, 07:07 AM   #245 (permalink)
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Bought back the coffee calls at a loss of 200 %. Coffee prices moved up strongly after the losses of the USD last Friday after the very weak report.

There was a number of good fundamental arguments (favourable rain in Vietnam, huge crop in Brazil, seasonals) for being short coffee, but it is important to exit a trade when it moves to the wrong direction. Even more if it moves to the wrong direction in spite of favourable fundamentals.

It might be interesting to short coffee again But I will not enter this trade before a sign of a high.

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Old June 9th, 2016, 07:10 AM   #246 (permalink)
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Bought back the GCV P1100 at a profit of 45 %.

Usually I exit trades that make a significant part of the potential profit within a short time. But I might enter this trade again at a lower level.

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Old June 9th, 2016, 09:47 AM   #247 (permalink)
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myrrdin View Post
Bought back the coffee calls at a loss of 200 %. Coffee prices moved up strongly after the losses of the USD last Friday after the very weak report.

There was a number of good fundamental arguments (favourable rain in Vietnam, huge crop in Brazil, seasonals) for being short coffee, but it is important to exit a trade when it moves to the wrong direction. Even more if it moves to the wrong direction in spite of favourable fundamentals.

It might be interesting to short coffee again But I will not enter this trade before a sign of a high.

Best regards, Myrrdin

Reason for the strong move of coffee prices seems to be talk about frost in Parana next Monday / Tuesday. Major damage seems unlikely as Parana typically produces only 5 % of Brazil coffee. Unless the cold reaches San Paulo or Minas Gerais, the impact should be minimal.

As long as temperature forecasts for the Major producing parts of Brazil stay above freezing temperatures, it might be interesting to sell OTM calls tomorrow. But this is a high risk trade. Keep the lot size small.

Best regards, Myrrdin


Last edited by myrrdin; June 9th, 2016 at 10:05 AM.
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Old June 9th, 2016, 12:07 PM   #248 (permalink)
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Great thread Myrrdin, really enjoy reading about your reasoning and views.

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Old June 9th, 2016, 12:59 PM   #249 (permalink)
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Sold the LHQ C92.

Hog prices are overdone in my opinion. They need very strong news every day to move up further.

Weights are moving up, third quarter pork production is expected to exceed second quarter production by a near record 205 million pounds as compared to a normal summer increase of 50 to 125 million (last year: 33 million).

Main price driver is export to China, which might be limited in case the USD moves up again.

Best regards, Myrrdin

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Old June 9th, 2016, 01:06 PM   #250 (permalink)
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CobblersAwls View Post
Great thread Myrrdin, really enjoy reading about your reasoning and views.

I appreciate your comment, as I am not always sure someone is interested in this topic.

There is a very limited number of questions, few comments about trades by other traders, a small number of readers clicking the "thank you" button. On the other hand obviously a large number of members read the thread.

Every question or comment is highly appreciated, as it shows me there is interest in option selling. This motivates me to go into more details in my contributions.

Best regards, Myrrdin

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