Another Day more trades for Nick as the grain markets fall apart again!

With another day of volitale markets we have another day that Nick has to adjust his position to try and fend off the downside pressure.

Below are all of Nick's open positions; today's trades which adjusted him back to 100,000 bushels sold in each of the 3 major grains; today's trades are highlighted via the blue color.


Below those are a couple of charts; the projected P & L looks good; but the delta changes tell him he needs to figure out what went wrong or fine some more lines of credit as his margin cost isn't exactly free.

But provided his projected profit and loss information is correct he is sitting rather decent as he now has nearly a 1.50 range where he is up over 10.00 a bushel on all of his bushels sold.  Who said you couldn't get 20.00 for wheat or beans?  OR 15.00 for corn?  Nick all be it in a very different style has a legitamet chance to do just that; get numbers that some just dream of; now all he needs is a little luck and a very good banker!!!!

Long	# of	Option	Futures	My Trade			Position Equivalent				Profits (Losses)	Days to Expiration
or Short	Contracts	Symbol	Reference	Date	Price	Delta	Delta (bu)	Gamma (bu)	Theta / Day	Vega	Actual	Actual	Over-Ride
LONG	31.00	CJ650P	CK1	22-Feb-2011	19.000	(0.17)	(25,797)	671	($691)	$574	($21,313)	16
SHORT	50.00	CJ670P	CK1	8-Mar-2011	8.000	0.27	67,406	(1,484)	$1,440	($1,217)	($3,750)	16
LONG	100.00	CJ690C	CK1	22-Feb-2011	28.875	0.60	297,776	3,570	($3,298)	$2,839	($8,125)	16
SHORT	35.00	CJ690C	CK1	3-Mar-2011	44.125	(0.60)	(104,222)	(1,249)	$1,154	($994)	$29,531	16
SHORT	60.00	CJ690P	CK1	3-Mar-2011	10.500	0.40	120,904	(2,147)	$1,980	($1,704)	($17,250)	16
LONG	100.00	CJ700P	CK1	8-Mar-2011	18.125	(0.48)	(238,365)	3,711	($3,363)	$2,919	$13,125	16
SHORT	100.00	CJ720C	CK1	22-Feb-2011	17.875	(0.38)	(188,746)	(3,542)	$3,225	($2,790)	$21,875	16
SHORT	35.00	CJ720P	CK1	27-Feb-2011	27.125	0.62	108,642	(1,235)	$1,128	($977)	($9,406)	16
SHORT	20.00	CN650P	CN1	9-Mar-2011	34.500	0.31	30,817	(227)	$251	($1,343)	$0	107
LONG	40.00	CJ700P	CK1	9-Mar-2011	20.750	(0.48)	(95,346)	1,484	($1,345)	$1,168	$0	16
SHORT	30.00	CJ660P	CK1	9-Mar-2011	7.125	0.21	32,106	(771)	$772	($646)	$0	16
SHORT	40.00	CJ720P	CK1	3-Mar-2011	21.000	0.62	124,162	(1,411)	$1,289	($1,116)	($23,000)	16
SHORT	20.00	CK650P	CK1	2-Feb-2011	28.875	0.27	27,145	(333)	$381	($799)	$11,125	43
SHORT	20.00	CK650P	CK1	15-Feb-2011	20.250	0.27	27,145	(333)	$381	($799)	$2,500	43
SHORT	5.00	CK700P	CK1	14-Feb-2011	36.500	0.47	11,670	(102)	$112	($238)	($375)	43
LONG	20.00	CK700C	CK1	19-Feb-2011	52.500	0.53	52,991	408	($447)	$953	($13,500)	43
SHORT	15.00	CK700P	CK1	19-Feb-2011	32.000	0.47	35,009	(306)	$335	($715)	($4,500)	43
SHORT	41.00	CK750C	CK1	15-Feb-2011	24.625	(0.34)	(69,420)	(764)	$854	($1,806)	$8,456	43
SHORT	2.00	CN500P	CN1	7-Jan-2011	20.875	0.05	497	(6)	$8	($40)	$1,725	107
SHORT	30.00	CN550P	CN1	23-Dec-2010	37.250	0.10	15,491	(173)	$193	($1,046)	$43,313	107
SHORT	20.00	CN600P	CN1	8-Mar-2011	17.625	0.19	19,203	(177)	$194	($1,049)	($500)	107
SHORT	22.00	CN630P	CN1	21-Jan-2011	47.875	0.26	28,546	(230)	$254	($1,363)	$22,825	107
SHORT	5.00	CN630P	CN1	8-Feb-2011	31.000	0.26	6,488	(52)	$58	($310)	$969	107
SHORT	15.00	CN650P	CN1	27-Feb-2011	29.625	0.31	23,113	(170)	$188	($1,007)	($3,656)	107
SHORT	14.00	CN720P	CN1	19-Feb-2011	60.875	0.48	33,905	(175)	$201	($1,059)	($6,038)	107
SHORT	40.00	CN750C	CN1	22-Feb-2011	41.500	(0.44)	(87,288)	(494)	$574	($2,997)	($7,750)	107
SHORT	55.00	CN800C	CN1	23-Dec-2010	30.750	(0.33)	(90,495)	(622)	$732	($3,802)	$0	107
SHORT	10.00	CN800C	CN1	26-Jan-2011	28.000	(0.33)	(16,454)	(113)	$133	($691)	($1,375)	107
SHORT	27.00	CN800C	CN1	28-Jan-2011	24.000	(0.33)	(44,425)	(305)	$360	($1,866)	($9,113)	107
SHORT	31.00	CN800C	CN1	22-Feb-2011	28.500	(0.33)	(51,006)	(350)	$413	($2,143)	($3,488)	107
SHORT	60.00	CN800C	CN1	8-Mar-2011	31.750	(0.33)	(98,722)	(678)	$799	($4,148)	$3,000	107
SHORT	45.00	CN850C	CN1	19-Feb-2011	25.375	(0.24)	(54,006)	(436)	$518	($2,688)	$11,250	107
	1,138.00					(0.02)	(101,275)	(8,044)	$8,782	($30,901)	$36,556
LONG	30.00	SJ1260P	SK1	22-Feb-2011	17.375	(0.10)	(14,853)	354	($591)	$760	($20,813)	16
SHORT	20.00	SJ1300P	SK1	8-Mar-2011	4.000	0.22	21,837	(441)	$615	($842)	($4,500)	16
SHORT	45.00	SJ1340P	SK1	27-Feb-2011	20.500	0.44	97,882	(1,350)	$1,835	($2,500)	($2,813)	16
LONG	60.00	SJ1340P	SK1	8-Mar-2011	11.000	(0.44)	(130,510)	1,799	($2,447)	$3,333	$32,250	16
LONG	65.00	SJ1400C	SK1	22-Feb-2011	10.750	0.23	76,356	1,496	($2,104)	$2,851	($5,688)	16
SHORT	65.00	SJ1440C	SK1	27-Feb-2011	14.500	(0.11)	(35,561)	(875)	$1,321	($1,772)	$35,344	16
SHORT	80.00	SN1440C	SN1	9-Mar-2011	49.375	(0.37)	(149,710)	(731)	$1,443	($11,105)	$0	107
SHORT	10.00	SN1300P	SN1	9-Mar-2011	49.500	0.35	17,559	(96)	$164	($1,358)	$0	107
SHORT	30.00	SJ1300P	SK1	9-Mar-2011	8.500	0.22	32,756	(662)	$922	($1,263)	$0	16
SHORT	90.00	SJ1400C	SK1	9-Mar-2011	9.000	(0.23)	(105,723)	(2,071)	$2,913	($3,947)	$0	16
LONG	30.00	SJ1340P	SK1	9-Mar-2011	21.750	(0.44)	(65,255)	900	($1,224)	$1,667	$0	16
LONG	30.00	SJ1360C	SK1	9-Mar-2011	21.500	0.44	66,573	890	($1,248)	$1,672	$0	16
SHORT	100.00	SN1300P	SN1	27-Feb-2011	47.125	0.35	175,585	(958)	$1,644	($13,576)	($11,875)	107
SHORT	5.00	SK1600C	SK1	3-Mar-2011	10.500	(0.06)	(1,446)	(21)	$47	($140)	$1,781	43
SHORT	2.00	SN1400P	SN1	21-Jan-2011	88.875	0.55	5,500	(20)	$36	($288)	($1,475)	107
SHORT	4.00	SN1500C	SN1	15-Feb-2011	47.000	(0.29)	(5,763)	(32)	$68	($503)	$2,225	107
SHORT	6.00	SN1400P	SN1	8-Feb-2011	63.750	0.55	16,500	(59)	$108	($865)	($11,963)	107
SHORT	8.00	SN1500C	SN1	14-Feb-2011	56.625	(0.29)	(11,526)	(63)	$136	($1,005)	$8,300	107
SHORT	12.00	SK1400P	SK1	2-Feb-2011	42.500	0.64	38,628	(186)	$307	($1,033)	($21,300)	43
SHORT	10.00	SN1360P	SN1	28-Jan-2011	67.250	0.47	23,670	(101)	$178	($1,452)	($5,750)	107
SHORT	20.00	SK1400C	SK1	15-Feb-2011	44.875	(0.35)	(35,218)	(312)	$513	($1,721)	$17,875	43
SHORT	20.00	SN1200P	SN1	8-Mar-2011	14.500	0.17	17,314	(132)	$229	($1,901)	($4,750)	107
SHORT	15.00	SN1300P	SN1	26-Jan-2011	48.500	0.35	26,338	(144)	$247	($2,036)	($750)	107
SHORT	30.00	SN1700C	SN1	19-Feb-2011	20.750	(0.12)	(18,250)	(124)	$343	($2,272)	$10,688	107
SHORT	30.00	SK1340P	SK1	19-Feb-2011	36.375	0.45	67,580	(509)	$801	($2,742)	($8,063)	43
SHORT	20.00	SN1400C	SN1	22-Feb-2011	53.000	(0.44)	(44,237)	(196)	$363	($2,883)	($8,000)	107
SHORT	30.00	SN1600C	SN1	23-Dec-2010	62.000	(0.19)	(27,930)	(175)	$428	($2,988)	$60,375	107
SHORT	25.00	SN1500C	SN1	26-Jan-2011	67.250	(0.29)	(36,020)	(198)	$424	($3,142)	$39,219	107
SHORT	45.00	SK1400P	SK1	3-Mar-2011	48.000	0.64	144,855	(697)	$1,152	($3,874)	($67,500)	43
SHORT	40.00	SN1600C	SN1	15-Feb-2011	28.250	(0.19)	(37,240)	(233)	$571	($3,984)	$13,000	107
SHORT	50.00	SN1200P	SN1	23-Dec-2010	42.500	0.17	43,286	(330)	$573	($4,754)	$58,125	107
SHORT	40.00	SN1500C	SN1	23-Dec-2010	82.500	(0.29)	(57,632)	(317)	$678	($5,026)	$93,250	107
SHORT	100.00	SK1500C	SK1	22-Feb-2011	11.250	(0.15)	(72,973)	(882)	$1,724	($5,405)	$9,375	43
SHORT	55.00	SN1600C	SN1	8-Mar-2011	27.250	(0.19)	(51,205)	(320)	$785	($5,478)	$15,125	107
SHORT	60.00	SN1500C	SN1	8-Mar-2011	45.500	(0.29)	(86,449)	(475)	$1,018	($7,540)	$28,875	107
SHORT	95.00	SN1600C	SN1	22-Feb-2011	20.000	(0.19)	(88,446)	(553)	$1,356	($9,461)	($8,313)	107
SHORT	75.00	SN1320P	SN1	3-Mar-2011	47.125	0.39	146,972	(741)	$1,281	($10,532)	($42,188)	107
LONG	50.00	SN1200P	SN1	3-Mar-2011	15.250	(0.17)	(43,286)	330	($573)	$4,754	$10,000	107
	1,502.00					(0.01)	(100,042)	(8,231)	$16,038	($102,350)	$210,069
LONG	30.00	WJ730P	WK1	22-Feb-2011	12.625	(0.29)	(44,230)	877	($958)	$824	($1,875)	16
SHORT	15.00	WJ750P	WK1	8-Mar-2011	10.750	0.42	31,847	(499)	$546	($466)	($6,281)	16
LONG	20.00	WJ780P	WK1	8-Mar-2011	23.500	(0.62)	(62,096)	634	($717)	$604	$12,750	16
LONG	100.00	WJ830C	WK1	22-Feb-2011	25.625	0.15	74,012	1,855	($2,256)	$1,862	($105,000)	16
SHORT	100.00	WJ880C	WK1	22-Feb-2011	13.500	(0.04)	(22,003)	(732)	$905	($767)	$61,875	16
LONG	30.00	WJ880C	WK1	27-Feb-2011	17.250	0.04	6,601	220	($271)	$230	($24,188)	16
SHORT	15.00	WN900C	WN1	9-Mar-2011	32.750	(0.32)	(23,901)	(151)	$219	($1,145)	$0	107
SHORT	10.00	WN850C	WN1	9-Mar-2011	45.750	(0.41)	(20,539)	(111)	$156	($829)	$0	107
SHORT	10.00	WN750P	WN1	9-Mar-2011	44.875	0.36	17,828	(113)	$141	($795)	$0	107
LONG	20.00	WJ760C	WK1	9-Mar-2011	22.750	0.51	50,626	677	($740)	$633	$0	16
LONG	10.00	WJ760P	WK1	9-Mar-2011	25.000	(0.49)	(24,620)	338	($370)	$316	($500)	16
SHORT	10.00	WJ800C	WK1	9-Mar-2011	9.500	(0.27)	(13,347)	(272)	$314	($262)	$0	16
SHORT	25.00	WN700P	WN1	23-Dec-2010	37.875	0.24	29,773	(241)	$286	($1,659)	$16,250	107
SHORT	18.00	WN700P	WN1	8-Mar-2011	18.750	0.24	21,437	(173)	$206	($1,194)	($5,513)	107
SHORT	12.00	WN800P	WN1	21-Jan-2011	58.750	0.47	28,497	(140)	$184	($1,015)	($7,725)	107
SHORT	10.00	WN800P	WN1	26-Jan-2011	42.500	0.47	23,747	(117)	$154	($846)	($14,563)	107
SHORT	10.00	WN800P	WN1	19-Feb-2011	38.125	0.47	23,747	(117)	$154	($846)	($16,750)	107
SHORT	10.00	WN800P	WN1	27-Feb-2011	56.000	0.47	23,747	(117)	$154	($846)	($7,813)	107
SHORT	2.00	WN850C	WN1	23-Dec-2010	89.125	(0.41)	(4,108)	(22)	$31	($166)	$4,338	107
SHORT	4.00	WN850P	WN1	2-Feb-2011	57.500	0.58	11,608	(44)	$62	($331)	($9,425)	107
SHORT	12.00	WN850P	WN1	8-Feb-2011	47.500	0.58	34,825	(132)	$186	($994)	($34,275)	107
SHORT	5.00	WN850P	WN1	14-Feb-2011	45.625	0.58	14,510	(55)	$77	($414)	($14,750)	107
SHORT	15.00	WN850P	WN1	15-Feb-2011	56.375	0.58	43,531	(165)	$232	($1,242)	($36,188)	107
SHORT	30.00	WN850C	WN1	22-Feb-2011	65.375	(0.41)	(61,617)	(334)	$467	($2,486)	$29,438	107
SHORT	20.00	WN850C	WN1	8-Mar-2011	52.750	(0.41)	(41,078)	(222)	$311	($1,657)	$7,000	107
SHORT	10.00	WN900C	WN1	23-Dec-2010	73.500	(0.32)	(15,934)	(100)	$146	($764)	$20,375	107
SHORT	2.00	WN900C	WN1	12-Jan-2011	66.625	(0.32)	(3,187)	(20)	$29	($153)	$3,388	107
SHORT	20.00	WN900C	WN1	3-Mar-2011	57.000	(0.32)	(31,868)	(201)	$292	($1,527)	$24,250	107
SHORT	50.00	WN950C	WN1	22-Feb-2011	36.875	(0.24)	(60,722)	(434)	$652	($3,362)	$34,063	107
SHORT	60.00	WN1000C	WN1	23-Dec-2010	49.250	(0.18)	(54,711)	(434)	$671	($3,428)	$98,625	107
SHORT	6.00	WN1000C	WN1	14-Feb-2011	63.125	(0.18)	(5,471)	(43)	$67	($343)	$14,025	107
SHORT	15.00	WN1000C	WN1	19-Feb-2011	44.750	(0.18)	(13,678)	(109)	$168	($857)	$21,281	107
SHORT	30.00	WN1100C	WN1	26-Jan-2011	39.250	(0.10)	(14,918)	(141)	$227	($1,145)	$46,875	107
SHORT	12.00	WN1100C	WN1	28-Jan-2011	31.675	(0.10)	(5,967)	(56)	$91	($458)	$14,205	107
SHORT	30.00	WN1100C	WN1	27-Feb-2011	18.875	(0.10)	(14,918)	(141)	$227	($1,145)	$16,313	107
	778.00					(0.03)	(102,575)	(836)	$2,041	($26,672)	$140,205

-

Please stop back for more on Nick's trading; as I am guessing the USDA report will add more things he needs to do; not take away.

Weak Grain Markets Continue; will this week's USDA Report Change the trend? Update on Neutral Nick!

The weakness in our grains has continued the past couple of days despite the fact that most are looking for Thursday's USDA S & D report to be on the friendly side.

With these fast moving markets and the fact that I have been at some marketing meetings the past couple of days we find that our marketing character Neutral Nick is out of whack on his position.  So he was forced to get back in line towards his goal of staying short delta bushels equal to 100,000 or so for each corn, soybeans, and winter wheat.

The amount of moves he was forced to do has started to become over excessive; but his projected bottom line has stayed good and after today's adjustments still looks good if not great.

Here are his trades for the day to try and square him back up.

As you can see he had some serious adjusting to do; as he had to add positions that equaled to about 240,000 short on corn, 215,000 on soybeans, and 55,000 on wheat; in other words instead of him being short 300,000 before these moves he was long a little over 200,000 bushels or about 1/2 million bushels off of his goal.

This next slide is what lets him have a little breather; even though he made a major mistake and followed up too late on his position he still has a chance to add some major dough to his bottom line.  If we can somehow stay near unchanged until June he has a chance to add $3,000,000 or about $10.00 a bushel on his 300,000 bushels.  Not bad; realistic?  I guess I am not the judge of that.

The one thing that does standout on the above chart is the fact that it is leaning a little to the wrong side; he needs to find a way to stay profitable even on a huge break and right now he could lose $$ if we where to break super hard; so he will watch and adjust.

This last slide is the one that is real concerning as it shows how his delta will move as the markets move; simply put it is too much; so he needs to find a way to adjust or slow the gamma down.

If he doesn't change the above chart Nick's stress level will simply get higher; perhaps in the end it is good??? But it looks scary to me.

Charts and Strategies to End Week!

Search Amazon.com Automotive for

Here are a few charts to close out the week; also included are a few trade strategies

 

Keep reading for more charts and strategies

Margin Requirement for Neutral Nick !!!!! Ouch.......

I recently talked to my broker and asked him if he could plug in what the margin requirement would be for some of Neutral Nick's positions.

I had him do this before the last updated trades where added and the results I seen where a little surprising.

First off as we know Nick has a lot of trades instead of 20 per commodity he has hundreds. 

Before he added the trades on the 3rd this is what he calculated for margin required (Maintenance).

Wht  737,736.75

Bns  2,099,957.00

Crn  813,301.25

Ouch; first I asked why so much on beans compared to the other; then I went back and look and see that this was before I got back to 100,000 delta bushels short.  So this might explain this part as on the 3rd Nick adjusted by more then 175,000 bushels.

OK now those numbers above are plenty big and lead to enough interest expense; but to calculate this out we are missing a factor; what hedge account balance is.  In basic summary when one sells an option that money goes into your account balance and when one buys and option that money comes out of the account balance.  To see what dollar amount is actually needed to clear the margin account one needs to take those numbers off.

Nick received the following for his options sold.

Wheat	$       688,173.75
Soybeans	$     1,263,062.50
Corn	$       541,687.50
Total	$     2,492,923.75

So now when we compare the two we can come up with the needed margin.  Now depending on timing Nick would need either the initial or the Maintenance.  If it is theMaintenance this is what the net out of pocket if you will would be at.

	Net Dollars added to account		Additional $$ required to meet Maintenance Margin
Wheat	$     688,173.75		$          49,562.25
Soybeans	$ 1,263,062.50		$         836,894.50
Corn	$     541,687.50		$         271,613.75
Total	$ 2,492,923.75		$     1,158,070.50

Now I don't view these as cheap by any means; but if I go back and look at what his margin would have been simply starting out with 20 contracts of each of these three grains and figure the market difference I calculate out that Nick would have had about 70k in margin for his wheat position, 201k for his soybean and 140k for his corn.  Depending on the adjustment that ends up to Nick after he squared his position he might be in a position that his margin isn't costing him quiet as much as he thought.  Add to that the benefit of net being ahead dollars versus behind on a straight hedge with the only way to get it back via the market falling we find Nick starting to feel a little good again.  After all unchanged markets in just his hedge account leave him with about 3 million or over $10 a bushel on 300,000 bushels while an unchanged market leaves a normal short position out $80,000.

Keep in mind that the above info is based on sources we (I) believe to be reliable; as there are plenty of risks that may not be talked about in the above.

CHS Harvest for Hunger

My employer has recently started a program to help feed some of those in need.  Some of our local producers have been generous enough to donate.

For more information on this program call 800-658-5535 or click the link below!

http://www.midwestcooperatives.com/images/E0068501/IMG_0001.pdf

Neautral Nick update 3-3-11

Neutral Nick made an update to his position today; see

Strategy Comparisons 2011 New Crop

Below are some various charts/graphs showing strategy comparisons for various corn marketing strategies.  All of these are done basis time of when the option expires and as a producer off setting the trade with a cash sale assuming a zero basis.

My conclusion is that there isn't one that is that much better then the other; but having a wide variety probably is the best risk management option.

closing comments grain markets 3-1-11

Markets closed mixed today in another volatile session for the grains.

Old crop corn continued it strength  with old crop corn up 5 cents, new crop corn was down 2 cents as we now have Dec corn 1.30 below the July contract, old crop beans where up 10 cents, new crop beans where up 4, KC wheat was down 1 on nearby while deferred slots where off 2-7 cents, MPLS was down 2-7 cents, CBOT wheat was off 7 in the nearby while some of the deferred slots where off as much as 14 cents, crude oil was up over 3.50 a barrel and presently is now over 100.00 a barrel , equity markets where softer with the DOW down 168 points, and presently the US dollar is up 139 points at 77.06 on the March contract.

Today was another great day in that the grain markets showed plenty of resiliency; corn especially as it made new high closes in a couple months with the front month at it’s highest level in over 30 months.  MPLS wheat didn’t close firmer but it did trade fairly well despite the weakness that CBOT wheat showed.  Basis for spring wheat continues to be strong; I would really recommend having basis offers out and probably in slots as far out as new crop.  The strength in spring wheat basis seems to becoming from a combination of protein spreads, freight, and demand both domestic flour pricing and a steady diet of export business.