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| For profit or loss (you'll all know how it turns out next week).... I put on a bearish option spread position before the close today.
Bought 6.50 September Put @29 1/4
Sold 6.00 December Put @21
- Net = Spent 8 1/4 cents
Bought 8.00 September Call @4 1/4
Sold 8.00 December Call @27 1/4
- Net = Took In 23 cents
OK, shoot holes in the trade or tell me why I'm wrong.... but (in my opinoin) if we continue to rally through summer due to FSU/EU issues, then the Sept Call should protect the upside & I'll be out of the $ on the Dec, but the Sept 6.50 Put should expire worthless & the 29 cents I took in for selling it will cover the U/Z spread (closed at 32 today) - if wheat is over $8, then the $6 Z put will be cheap to buy back.
For the downside, if wheat collapses, the 6.50 put will be in the $ quickly & I'll have the 50 cent advantage to the Short 6.00 Dec, plus the 23 cents I took in on the short calls, plus the (currently) 32 cent advantage of the spread......
Make sense? It should make money, but the market may still find a way to break it off in my A$$....
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MGEX Wheat closes up 29 Cents !
