Youngtrader's Commodity Options Journal

Discussion in 'Journals' started by youngtrader, Jul 5, 2008.

  1. Hi everyone

    Its been a while since I posted on my other journal (Youngtrader's Commodity Journal) but with my summer job working nights and barely catching enough sleep to keep me functioning during the day to trade I just don't have the time to keep it up to date.

    However I will be starting this journal because I will be done with my job at the end of July. I have also found an interest in options, particularly soft commodity and livestock options. The thing about options is that I love the fact that you can quantify your risk to such precision. You can spread off risk where an outright futures trader could not. Plus if any of you know me very well, you know that I get extremely complacent in everything I do and am always looking for the bigger better deal if you know what I mean. Options provide that BBD and its a challenge that I love to take on. There is so much for me to learn and so many different ways to trade these products that its a whole new world for me and I know I can be as successful in options as I was in futures (maybe even better).
  2. First off a little bit about me for you readers that never followed my first journal.

    I am 18 years old and will be a senior in high school this year. I will also be graduating 1 semester early to come down to Chicago (I live on a farm in Iowa) and work in the pits (more than likely clerking in eurodollar options). I also plan on attending DePaul University while Im there.

    I have been involved in the Stock Market since age 11 and have been involved in the Commodities Markets since I was 16. I started with a measly $3,000 trading the commodity markets (mainly grain and grain spreads). Have since then grown my account to a little over $70,000 (all documented in my other journal except for that last $10,000 which was made when I wasn't posting this summer.....mainly off of options trades if your curious).

    I will trade anything and have experience in trading just about everything out there profitably. I use a combination of technicals (50,100,200 ma and RSI on a daily chart) and fundamental data. I also take a look at seasonal patterns for physical commodity markets (financial futures seem to be less seasonal). I do not believe in the statement that fundamental data is already reflected in the price......that is pure BS to me and I recommend that nobody believe it. However I also don't believe that technicals are all voodoo and the only thing that really matters are fundamentals. You need a nice mix to trade well.......something like 50/50 or 60/40 technicals/fundamentals.

    Well that just about does it for me. I won't be posting at all this week because I am going on a fishing trip but I will try to keep things up to date when I get back. Remember I work 5pm-5am every night and get very little sleep so if I don't reply for a few days it doesn't mean im closing the journal but just means I have absolutely no time to post........however I will make a huge effort to post every single day.
  3. So far I am short 5 july 175 coffee calls at an average premium of .80 they expire this week so no worries there. Coffee has been popping lately and I know its due to the crude rally but imo if you want to piggyback off of crude you can find better markes to do it on than coffee. Plus big brazilian crop getting harvested and the weather looks great for that harvest to progress.

    I also am long an oct 12/14c 1x2 sugar spread at .22 I sold the 14 call when its vol was at 36% and bought the 12 call when it had a 34% vol. If 14 turns out to be the top in sugar that would be great and with a little decline in vol this spread could be a nice winner. Sugar has just rallied too much......we were trading 10 or so not too long ago and now we are 14? The funny thing is fundamentally this market hasn't changed much so im betting on a decline in vol and a decline-steady price.

    Other than that I don't have anything going.......looking at a few things but they are pretty illiquid and want to keep them to myself until they are executed.

    Have a great rest of the weekend everybody!
  4. yo b sugarcane is a viable alternative ethanol fuel hence the four cent rally with oil. It will follow oil up wherever oil decides to go, id be careful on that sugar play man, other than that looking good buddy. how was your 4th

  5. Hey man

    Yeah I realize that sugar is getting a lot of its steam from oil but I still think 14 is around the top......or we at least chop from here. Its one of those deals you just have a feeling about you know?

    I had a great 4th man.....really partied it up! How bout you?
  6. Ok everybody im sitting in a hotel in South Dakota trying to get all my positions straitened up before I head back out to the lake tomorrow.

    Those coffee calls I have are basically worthless right that will be a few bucks coming in on Friday (I sold them by the way).

    As far as coffee goes we have been tanking hard and im loving it!!! Brazil is harvesting a huge coffee crop and their weather has been perfect harvest weather. So a big crop on the way along with seasonal weakness doesn't equal a strong market. However I think we could bounce here pretty soon but longer term I think we are headed through 130 and probably to 120 on sep futures. Vol is too high for me to like buying put spreads here so Im holding off on that and will just sell more calls in sep options.

    Still have my sugar trade and that is working nicely. Sugar has seems to be finding a range here and should chop from here on out. 14 should hold as good resistance while 13 should be minor support and then 12. With crude and corn breaking so hard its amazing that sugar can hold up so well.

    For tomorrow im looking at selling some 102 aug cattle straddles for 4 cents. Which puts my breakevens at 106/98. Cattle have been on a tear lately with strong cash and boxed beef. However we have fallen quite a bit here but it looks like we may have found support. With around 20 days till exp in aug cattle options I just don't see us breaking new highs nor trading down to 98 cents a pound.

    Might try selling some put in aug hogs tomorrow too.

    Other than that nothing going......this will not be as active of a journal as my futures journal was due to the fact that I am very new to options so I am still in the learning phase and I just don't seem to trade options as actively as I did futures.

    Good Trading
  7. Hey man, I wish you luck in your trading, even though I have no idea how the ag futures move or what fuels them to move. But as you know we're sitting in a similar boat age wise, so hopefully we can both make $ today.

  8. Thanks bud.....have been really busy and haven't been keeping up with your journal. How have you been doing?

    Hope your making a killing man! Your 18 and trading so no matter how well you do I have a ton of respect for you (there aren't many of us around).
  9. Well nothing really happened today in still laughing at the fact that I made $5,000 on one hog trade that lasted 3 days and my hold time is a lot longer in these options trades and its usually for a fraction of the profit lol!!!!! However anybody that knows me knows that I am abnormally complacent and always look for another challenge. Options are that challenge and I am dead set on mastering them!

    Sugar ratio spread working out nicely. Seems as if sugar has found a comfort zone, at least for now. I expect this to be kind of a slower trade and its gonna take some time before its really profitable, however it is going the right way at least.

    Coffee calls I sold are worthless so looking forward to Friday which is when the augusts expire.......tried to sell some sep calls but no luck. I hate paying up for options!!!

    Sold a 98 aug cattle put today for .55 these expire in 23 days so that trade should be good. Wanted to sell a straddle or something but thought there was too much risk on the upside.
  10. olias


    I agree that you need to follow the fundmentals also...especially for ags. I think the ratio of relevance of technicals to fundamentals also depends on the market(s) you're trading.
    #10     Jul 9, 2008