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For: Thursday 06-03-2010

Broadening Wedge

The corn market has been beaten down the last several sessions. The market has posted a new swing low but as of yet, not seen a lot of follow through. Looking at the chart we can see a possible broadening wedge formation. This type of action has me looking at selling out of the money put options in the deferred months as we have already seen the nearby July futures hit the lower ascending trend line.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: Sell a serial month August corn put for eight cents on a limit. (To get the order filled the September corn futures will need to trade down to at least the descending line.) Risk the option doubling in value. (>$400 not including commissions and fees), Look to take profits if the put trades to a half a cent.