Wednesday, December 29, 2010

neutral nick update

Neutral Nick went and updated his position today; under his theory of trying to have a net delta position of 100,000 bushels sold he added positions in corn and soybeans today.

To see more on Neutral Nick check out his page  at or continue reading below

He placed the following

For soybeans he added a new leg of selling 5 1300 March Soybean puts; as always his trades are based on closing prices; those closed at 34 1/2 cents

For wheat I show that his net delta position is still in line with where he needs or wants to be; so he did not doing any trades; but based on the closes his actual profits are showing at $16,000; not bad considering wheat prices are up about 20 cents since when he put the play on.

For corn he added 6 short 6.80 March corn calls.

He is now very close to a net short of 100,000 of each of the three commodities.

We are already noticing some challenges with this type of flow - i.e. margin cost/broker cost is high already.  Plus bid ask spreads are not accounted for; many times in volatile markets the bid ask can be a little keep that in mind.........and as always this is just a mock marketing plan; it makes no recommendation for any trade or position; futures and options are risky and not suitable for everyone and past performance doesn't mean future results.

Basically the character Nick is out there to see what might happen simply trying to play the volatility of the market place........personally I am not sure that I know anyone that would really want to jump in using the over aggressive style that sees 100 contracts or so being traded.......JUST TO START......for 100,000 bushels...........but it is a concept good or bad...........and hopefully we can see and learn as we go forward some of the benefits and risk associated with this type of marketing........which is basically trying to be protected if it goes down and own more if it goes up...........

Neutral Nick tries to tie together a cross of selling covered calls, sellling puts as re-ownership, delta equivalant position, delta to help explain a little of what those terms mean and how they work we will be posting links to various youtube video's on the different subject matters

Many will be based on stocks not commodities as there simply isn't alot out there........but the concept is the same

This first one is on Delta

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