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Diversified Option Selling Portfolio


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Diversified Option Selling Portfolio

  #1141 (permalink)
 myrrdin 
Linz Austria
 
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me65 View Post
what is cash is weak?

If you sell the LHZ future you sell hogs at the expiry date of this future some time in December.

If you sell hogs cash you sell them today.

"cash is weak" means that the chart of the cash price looks weak.

I hope his helps.

Best regards, Myrrdin

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  #1142 (permalink)
me65
Dresden, Germany
 
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Do you use the expensive ICE data for the trading of soft commodities options, or do you also benefit from the time-delayed data, for example from barchart.com?

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  #1143 (permalink)
 myrrdin 
Linz Austria
 
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me65 View Post
Do you use the expensive ICE data for the trading of soft commodities options, or do you also benefit from the time-delayed data, for example from barchart.com?

I use delayed data (from Trade Navigator) for the chart. To enter the trade, there is the following possibility for customers of DeCarley (and perhaps other brokers): If you enter the option as a buy or sell, the tool shows the live (!) bid / ask, to allow for placing an order. This service is free of charge. It does not work at Interactive Brokers.

Best regards, Myrrdin

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  #1144 (permalink)
 manuel999 
Germany
 
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myrrdin View Post
Currently I hold the following positions in the short option portfolio:

LHZ C62
LHG P60
LHJ C80
Longterm. The February contract looks undervalued, although it might see the 60 again before turning upwards. Cash is weak. Intend to sell LHG calls at significantly higher price of the underlying.
Meanwhile I rolled the LHZ C66 downwards as a hedge of the LHG puts, as cash price remains weak.
Sold some April calls, and intend to add puts at a lower price of the underlying.
(snip)

I noticed the LHJ C80 is very expensive (about 0.900).
Is that normal because it is so far out in DTE? Otherwise it looks quite overvalued, as it is close to the seasonal low then.

Thanks.

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  #1145 (permalink)
 myrrdin 
Linz Austria
 
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manuel999 View Post
I noticed the LHJ C80 is very expensive (about 0.900).
Is that normal because it is so far out in DTE? Otherwise it looks quite overvalued, as it is close to the seasonal low then.

Thanks.

The reason is the long time until expiration and the many things that can happen until then. The hogs that will be sold against the April contract are not yet born.

I was able to sell them at 1.12 on October, 2nd.

Best regards, Myrrdin

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  #1146 (permalink)
 manuel999 
Germany
 
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myrrdin View Post
The reason is the long time until expiration and the many things that can happen until then. The hogs that will be sold against the April contract are not yet born.

I was able to sell them at 1.12 on October, 2nd.

Best regards, Myrrdin

I used today's spike to sell for 0.950

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  #1147 (permalink)
 manuel999 
Germany
 
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myrrdin View Post
The reason is the long time until expiration and the many things that can happen until then. The hogs that will be sold against the April contract are not yet born.

I was able to sell them at 1.12 on October, 2nd.

Best regards, Myrrdin

In the meat markets, do you ever consider buying higher Calls for protection, as in CL?
E.g. in our example, buying the LH C90 for maybe 0.150 if you can get it for that price?

Thanks.

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  #1148 (permalink)
 myrrdin 
Linz Austria
 
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manuel999 View Post
In the meat markets, do you ever consider buying higher Calls for protection, as in CL?
E.g. in our example, buying the LH C90 for maybe 0.150 if you can get it for that price?

Thanks.

No, usually I do not buy protection in the meat markets.

There is a very small number of very large gaps, mainly caused by deseases. The problem in the meat markets is significant trends, that can develop and never seem to end. In this case it is a good idea to get out in time.

I like selling strangles to win at least on one side. But often it is necessary to leg in the two spreads, which is another risk.

For me the only reason to buy protection is if I sell these options in my IAB account. Here margin is extraordinary high for naked options.

Best regards, Myrrdin

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  #1149 (permalink)
 myrrdin 
Linz Austria
 
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myrrdin View Post
The risk regarding CL (and NG) is La Nina. If you look at a seasonal chart only inluding years with La Nina since 1990, it is clearly bullish from October until January, whereas in "normal" years it is clearly bearish.

The weather forecasts changed their probability for la Nina short time ago from close to zero to 60 %. This development made me buy back my CL calls. I do not intend to sell options in CL (and NG) until it is clear if La Nina will visit us or not. A probability of 60 % gives a success with almost the same probability as flipping a coin.

Best regards, Myrrdin

The Climate Prediction Center has increased the probability of La Nina in the coming months to 67 %.

La Nina would bring cold weather to the US and dry weather to the South of Brazil, where most of the soybeans are planted.

But: 67 % is not 100 % - there remains risk on both sides.

Best regards, Myrrdin

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  #1150 (permalink)
TraderGriz
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myrrdin View Post
The Climate Prediction Center has increased the probability of La Nina in the coming months to 67 %.

La Nina would bring cold weather to the US and dry weather to the South of Brazil, where most of the soybeans are planted.

But: 67 % is not 100 % - there remains risk on both sides.

Best regards, Myrrdin

I can see where this info is good to have. You pay much attention to fundamentals an i am trying to do more of it myself. Is there some place where you look to find reports similar to the USDA for other countries?

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