FCOJ – A Liquid Trading Opportunity

FCOJ still costs me the same at Wholefoods but should we not see a discount being futures are lower by 20% in the last five months. The line in the sand appears to be $115 the same level that has served as support on all attempts in 13′. I am expecting the lower red horizontal line to serve as stiff support and believe we could see prices into early 14′ make make their way back to the upper red line as seen in the chart below.

Weak demand not from my household but overall in the US the lack of appetite for Vitamin C in combination with lack of weather threats to Florida’s groves in this year’s hurricane season has accentuated the move south in OJ futures. From a technical perspective futures appear to be overextended and if today’s action proves to be more than a fluke and we experience some follow through do not rule out short covering. A trade back above $130 is my current call.

FCOJ - A Liquid Trading Opportunity

FCOJ – A Liquid Trading Opportunity

Now for the trade:

  • Long January futures and buy $120 puts 1:1 for a safety net. Futures closed today at $121. You have two months time and $150 of risk if futures collapse. If futures make you money your protection will cost you $608 and work against the futures profit. That being said you would need to see an expiration north of $125 to B/E if held until expiration. In a perfect world you see a spike in the coming weeks and liquidate both legs and you should have time value…you make money on the futures and retain some premium on the put options.
  • Another choice with not so many moving parts would be too simply buy January $125 call options. Total cost(risk) as of today’s settlement $458. 58 days until expiration and a current delta of 39%.

Once long help the cause and drink your juice!

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As always, I’m here to discuss specifics and give guidance. Shoot me an email…Give me a call… you can reach me at: mbradbard@rcmam.com or 312-870-1653

Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. 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 than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.

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