3-29 September Corn looks top heavy however as we go into planting you never know, this one by two ratio spread may be the answer to get us through any surprises. Buy the September 630 put and sell two September 550 puts, this trade is currently a debit spread of $350. This means that if corn doesn’t go down we have limited risk plus the capability of adjustments as the market goes into its seasonally weaker period of the year. The risk on this trade is under 470 where the spread runs out of money, thus the trade is profitable anywhere between 623 and 476. If being short a naked put (one) doesn’t fit into your risk parameters you can protect yourself buy buying the 470 put and creating a butterfly with limited risk. The profit potential at its highest is $4,000
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FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION’S STRIKE PRICE COMPARES TO THE UNDERLYING FUTURE’S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR EVEN MOVE IN THE OPPOSITE DIRECTION OF THE UNDERLYING FUTURES CONTRACT.
