Weekly options expire each Friday and are exercised into the front month futures. For example, the corn options set to expire on Jan. 13th are week 2. The options set to expire on Jan. 20th are week 3. The technical landscape for Mar corn looks like this:
Sitting below today's price action is support from the 100, 50, and 20-day moving averages. Trend support comes in at the $3.48 area. These support levels could be broken on an overly bearish report from the USDA on Thursday. An inexpensive way to hedge unpriced corn, would be to use a weekly put option.
As of this writing, a Jan week 2 Mar corn 350 put is going for about 1 3/4 cents. Breakeven for this position would be at $3.48 1/4, just above trend support. If the support level were to be broken and market moves sharply lower, then this option could be liquidated at a profit or short Mar futures can be taken at $3.50. The Maximum risk is the premium paid of 1 3/4 cents. If the market rallies on a bullish report, then only the premium paid is lost.
Feel free to contact Blackmore Commodities at 844-684-9199 or customerservice@blackmoregroupLLC.com with questions. Visit our website for more information at www.blackmorecommodities.com
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