Scale into bullish wheat trade

2-15-13 W.jpgI’m calling an interim low in wheat and as prices get further above the pivot point drawn on the chart above the friendlier I would become. I have advised clients in the last week or so to scale into bullish trade. I expect to see prices north of the highs we experienced in mid-January approximately 7% from current levels. That is only my first target and I would not rule out a challenge of contract highs to come. I like the idea of gaining long exposure in futures and selling out of the money calls 1:1 or ratio spreads in either May or July. Clients that want to stay with the trade could even be positioned out in December contracts in my opinion. It is appealing that even going out until the end of the year futures are only carrying a 4% premium to the front month.
Metals and energies generally catch the headlines and though I have several trading ideas and a strong opinion on those sectors Ag currently merits your attention. In fact all commodity traders need to pay attention to this sector as with the growing population globally, and with the increasing popularity of protein in our diets and a finite supply or arable land I think the overall trend is up for decades to come. That does not mean there will not be opportunities to play the short side as no market not even wheat will move up in a straight line.
To discuss in more detail this chart or any other you can reach me at: mbradbard@rcmam.com or 954-929-9997
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.

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