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<DIV><EM><FONT color=#000000 size=2>Help! The trading demons are out to
get me! I am in a terrible rut! Everthing that could go wrong
has. I havent had a winning day in weeks. When I have gotten into a
bad streak, I papertrade, I read Van Tharps stuff, I follow all of the
Psychological crap out there to get my confidence back, then when I go to place
the first trade, following my rules, I get a loser. No big deal,
confidence is still up so I wait for the next setup, take the trade, and of a
course a loser so I dont take the next trade which is the winner. The next
one I take is another loser. Or just when I get into a trade, my ISP goes
down or my computer locks up. This never happens when I papertrade!
Or today, I decided i would trade the mini SPOO to get my confidence back and
PMBe is having problems so I missed 3 trades and had a winner turn into a
loser! I have tried 4 different brokerage firms and obviously that is not
the problem. I have been doing this full time for seven months and am
negative big time! </FONT></EM></DIV>
<DIV><EM><FONT color=#000000 size=2></FONT></EM> </DIV>
<DIV><EM><FONT size=2>What should I do? I unfortunately have done
the incorrect thing and jumped to another system or approach when one failed,
looking for the Holy Grail. I know its not there but I have this glimmer
of hope that it is. My system now is very simple and relies on
"reading" 2 minute candlesticks and looking for reversal patterns and
support and resistance points. I use Stochastics as a basis to assess
divergence. Pretty simple stuff yet I cannot win.</FONT></EM></DIV>
<DIV><EM><FONT size=2></FONT></EM> </DIV>
<DIV><EM><FONT size=2>Please Help!</FONT></EM></DIV>
<DIV><EM><FONT color=#000000 size=2></FONT></EM> </DIV>
<DIV><EM><FONT color=#000000 size=2></FONT></EM> </DIV>
<DIV><EM><FONT color=#000000 size=2><BR>Gary
Kramer<BR></FONT></EM></DIV></BODY></HTML>
</x-html>From ???@??? Fri Feb 26 12:13:35 1999
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Date: Fri, 26 Feb 1999 14:12:58 -0500
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From: "Dtrader" <dan@xxxxxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: Interesting Corn Option Trade
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-----Original Message-----
From: I4Lothian@xxxxxxx <I4Lothian@xxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Thursday, February 25, 1999 8:52 PM
Subject: Interesting Corn Option Trade
:Looking over the Players Sheets from the grain room at the CBOT I noted an
:interesting trade in the Sep and March Corn Options today. It was
accredited
:to ED&F Man, which is the firm my firm clears through, though I have no
idea
:who's trade this was.
:
:Anyway, someone bought 1400 of the Sep 3.00 calls and 2.10 puts, and sold
1400
:of the Sep corn 2.60 puts and 1400 of the March 2000 2.80 calls. For this
:four-legged spread they received a 37.5 cent credit.
:
:It appears the spread closed at about 38 5/8. The trader who bought this
:spread is effectively long the Sep corn versus short the March, via the
short
:2.80 calls. However, they have protection to the downside at 2.10, should
the
:Sep fall apart. And, they have protection against a big rally by owning
the
:Sep 3.00 calls.
:
:Initially, the trader is long .55 deltas on the Sep positions and short .29
:deltas on the March Positions. That works out to be the equivalent of 770
:contracts long in the Sep versus 406 contracts short in the March.
:
:One could assume that should the 3.00 calls come into play that the
Sep-March
:spread will have tightened up from a carry of 16 cents, which will be
:profitable for the trade. Since this trade will play out in the old crop
(Sep
:options expire in August), the potential impetus for a sharp rally will
have
:to come from the demand side, since we know what the supply side is.
:
:However, an astute CBOT member friend of mine pointed out some potential
:hazards to this trade. First off, the corn loan program will start to end
:come Aug. 1. If prices are low, the farmers are likely to just hand over
the
:grain to the government rather than pay the loans back. After all, in
another
:couple of months they will need to make room for the new crop harvest. And
:the government is supposed to just turn right around and sell the grain on
the
:open market. There is no grain reserve to lock up supplies for years, or
:until prices recover.
:
:This corn will quickly find its way into commercial hands. It is unlikely
:that farmers are going to want the corn, when again they will have new crop
to
:store in a couple of months or less. This movement of the cash grain to
:commercial hands from the farmers via the government is likely to decimate
the
:corn basis in August and September.
:
:It is my guess that this is a longer term trade, most likely exited some
time
:in June or early July. The September positions by themselves would be
called
:a fence, short a vertical put spread to get long with defined risk. Long
the
:3.00 calls to offer upside protection. The March call seems like an odd
add
:on to help punch up the initial cash credit. Volatility is relatively low
:because of the narrow ranges and low prices. In fact, a corn option pit
:broker told me the March volatility on the 280 calls was 3% lower than
similar
:delta December calls. That might be the weak link in the trade.
:
:Should low prices spur consumption this summer, and should production be
:reduced by lower corn acres because of an advantage to soybeans given the
cost
:of inputs and a better government program, any weather scare could make
those
:March calls soar. This is especially true relative to the Sep because of
the
:plentiful supplies supposed to become available.
:
:Now, if the government were to come in with some surprise giveaways,
reserve
:program or such, then it could be a different story. Only time will tell.
:
:Regards,
:
:John J. Lothian
:
:Disclosure: Futures trading involves financial risk, lots of it!
Thanks for that, John. It's not often we see reasoned analysis on these
sort of lists.. I agree that the sale of the call up top was just for added
premium. I don't n\believe the trade will be carried for very long at all
because I don't see why the trader wants to carry the position into a time
when the loan program will become topic du jour, and in a way that would be
negative to the trade. June is the latest i see the trade being caried
into.
Dtrader
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