Tuesday, January 11, 2011

Vinny Vegas Marketing Plan executed

Vinny Vegas executed his marketing plan today ahead of the USDA report as scheduled.

Below is how he worded his not so organized marketing plan shortly before Christmas

Vinny Vegas - Simply sells his cash grain a day before the January USDA crop report; he then re-owns with 3 leg trade that includes sellling put options slightly below the market and using that to purchase bull call spreads.  He will try to do 1/2 his bushels with July options and the other 1/2 he will sell July puts to buy nearby serial options Jan options that expire around 10 days after the USDA report.  The last couple years his strategies didn't work at all; but in 2008 he managed to get well over $100 a bushel for his spring wheat.  (He sold at the money July puts to buy March call options and did so at a 5-1 ratio; so when spring wheat got to 20-25; he was getting 5 times that)

This year he has 100,000 bushels of spring wheat, 100,000 bushels of corn, and 100,000 bushels of soybeans.  On January 10-11th he will place the above strategies; on all of his old crop grain.

Now today he executed his plan.  On Spring Wheat he sold the cash and replaced with as mentioned above; because of liquidity

So for his three leg wheat re-ownership he sold the 7.60 (10 contracts or 50,000 bushels)July put to buy the 8.10-9.10 (10 contracts each) bull call spread for about even money.  He has opened the door to add on to his price if we rally; but he also opened the door to end up adding a loser to a good profitable price.

His other ownership strategy was to sell at the money July puts to buy serial Feb Options..........via this trade he sold the 8.10 (10 contracts) put and used that to purchase the 7.90-8.60 (100 contracts) bull call spread; he was able to get 10-1 on this trade; so if we manage to get a huge spike he can add 7.00 a bushel to his wheat price-minus what it costs to buy back the short put.

He did 50,000 bushels in each; with the first 3 leg trade done at 1-1-1 ratio; while the 2nd done at 1-10 ratio; so on his 50,000 bushels; he is actually playing it like he owns 500,000 bushels a huge rally.

For corn he did the following; sold 10 of the 5.70 July Puts and purchased 20 July 6.00 calls while selling 20 July 6.50 calls

The other 1/2 he sold 10 July 6.20 puts and purchased 70 of the Feb 6.20-6.70 bull call spreads

For soybeans he placed the same style of trades; selling the cash and using the above somewhat over aggressive re-owernship trades.

Sold 10 of the 13.80 July puts and bought 60 of the 13.70-14.40 Feb Bull Call Spreads; giving his lots of bang for his dollar if the report is friendly.

On the three leg he sold 10 of the 13.00 July puts and purchased 10 of the 14.00-16.50 bull call spreads

All of his trades where near free trades and the cash futures he locked in where 8.65 on MPLS March, 6.07 on March corn and 13.55 on March soybeans.

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