Commodities Today: A Traders' Market

by: Matthew Bradbard

The 100-day moving average in crude oil remains the line in the sand, in August at $58.82. We feel we’re getting close to an interim bottom but will remain on the sidelines until a bottom is confirmed. Natural gas is basing out for the last 3 days, the trading range has been 15 cents. Buy October $1 call spreads right here and sit on you hands for the next 5-8 weeks. Risk/reward on the trade, expect to pay approx. $2,000 per spread with a max target of $8,000 profit. We may be wrong on the trade, but would anyone question the trade as an investor taking a trade with a 4:1 risk/reward?

The story remains much of the same, the dollar and yen do one thing and the other currencies do the opposite. We have no recommended currency trades at the moment.

The stock market looks lower into next week but be careful of bank earnings next week. Not that I trust the numbers, but we could see a rally on cooked books. Trail stops down on shorts or lighten up. Short March 10′ Euro-dollars via options and futures.

We were buyers of December $4 calls for clients in corn today, filled at $487.50/per. Being long for clients in gold and silver of late has been somewhat painful, though trading the spreads has eased the pain. We advised clients to buy back the top leg of their spreads in December silver today. We made a modest attempt at the 200 day moving average in silver today, on September silver we got within 6 cents on the lows. That is close enough for me! Buy December $3 call spreads, we we’re filled today on $14/17 at $2,150 for clients.

Livestock was a non-event, though we did put in GTC limits to exit put spreads for clients. Our objectives were met on orange juice today, the options we had been reccomending for the last three weeks were taken off at a tidy profit today. We took 80% of our clients positions off and will gamble with the rest looking for the big move.