Friday, June 8, 2012

Neutral Nick - Update as he locks in more profits trading grain options

Our Mock trading Character Neutral Nick is at it again; locking in more profits; taking winners off the table and doing some adjustments in his goal of making money trading grain options.

The first trade Nick did today was turn his July corn position into a free trade or guaranteed winner via covering his short puts with 5.80 puts.  He previously covered all of his short July calls and now decided to take risk off the table locking in a GTD profit of over $100,000 and potentially as much as 180,000.  With about 530 total contracts traded he will have commission expense of about $15,900; still netting out someplace between 85k and 165k after commissions.  Not bad; plus a chance to continue to sell premium and make money as we go forward.

As always there is risk in commodity futures and options and they are not suitable for all.

Here is his July corn chart

He didn't do any adjustments to his Sept corn positions and just has some 6.00 calls sold.  But he did sell another 50 of the 5.50 Dec corn calls to help square up his position.

Below is that P & L Graph using RJO's Position Book.

For beans he is rolling the dice for another week or so; this was the one trade not profitable for him the last time we looked; but it has turned profitable with those adjustments about a month ago; with us being right in the middle he is going to leave the positions.  He looks to adjust or lock in a winner sometime in the next week or so.

Here is the July P L Graph.

For Nov beans he is also not doing anything as they remain where he wants them to be and doesn't feel like trying to get greedy adding too much leverage.  Presently he is up over 100,000 on these positions with a goal of making someplace around 700-800k.

For Wheat he is locking in all of his July positions with profit of $126,000; potential to make about another 25k but no reason to take the risk of an big move one direction or another.  Commissions on this should be a little less then 9k as he has 280 contract total traded.  So he is netting over 115,000.

(He is taking off all of the July wheat positions; so even though he only has 180 open trades he has another 100 contracts that he needs to buy back to off set positions even though they are really cheap)

For his Sept and Dec wheat options he is choosing not to adjust at this time.  Perhaps next week when he has some more time.  One thing Nick has learned is that more trades also equal more risk.

So there you go Nick is locking in another couple of hundred thousand dollars again as July options get close to expiration and potentially depending where his bean and corn July positions end up.  He has locked in the wheat profits do he has no risk there and turned his corn position into one that is limited in risk and a GTD winner, while his bean position remains open.

Keep in mind that a couple months ago when the May options expired Nick also locked in a couple hundred thousand net profit.

That post can be found here

The above link also shows any other open positions other then the adjustments made above.  His positions are all listed here

Let me know if you have any questions.

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