NEW PODCAST | We just released a new Turner’s Take podcast and we dive into why we think grains and livestock are range bound, looking for short opportunities in crude and rbob gasoline, and we also talk about the US Dollar. Please click here to listen to the latest episode of TURNER’S TAKE PODCAST
MACRO MARKETS | Hurricane Irma and North Korea have been the two macro stories that seem to have the most influence on some of the markets. Gold has seen support since North Korea started to test missiles again while OJ and RBOB gasoline have been the most active due to the latest hurricanes. I like fading the RBOB gasoline move. The production outages will be short term and I’m hearing a lot of the refineries are up and running again or will be soon.
GRAINS | I continue to think corn will be range bound between the next month or two. I like selling straddles and collecting premium over the next month or two. With Dec corn around $3.60 I don’t see us being much more than 20 cents lower or higher for any length of time over the next month or two. We have a lot of corn but with a carryout a little north of 2.0 billion I don’t see it as too burdensome while it is not tight either. It is too late for a weather rally now and frost or South American planning rallies are still far away. For the near futures I like playing the range and selling premium.
LIVESTOCK | I live cattle will also be range bound for the next few weeks or months. We have a lot of supply coming to market (as predicted by previous Cattle on Feed reports) but we are also going to see demand pick up too, which is seasonal. With Dec LC trading around 113 I like selling straddles. The 113 call/put straddle was trading between 8.500 and 9.000 today. That give you a range between 104 and 121 in Dec LC.
Dec Live Cattle
I also think the Oct/Dec LC spread is going to provide a good value soon. Seasonally it is a little early to get in this one but Oct is now trading more than 5 full points under December!
Oct/Dec Live Cattle
ENERGY | I have been bearish on Crude Oil for a while because as crude reaches $50 all the shale operators start to be profitable and they ramp up production. November crude is around $48.50 and like selling call spreads above $50 on rallies. I don’t want to short it outright because you never know what can happen with OPEC or when a new fight breaks out in the Middle East, so the short call spreads are a way to collect premium but have a fixed risk in case the unexpected geopolitical event happens.
I also like playing the bear side of RBOB gasoline. As we talked about above, the short term damage has been done and refineries are coming back online. I think the Dec17/Dec18 RBOB spread looks good on a chart. It is a little thin but that is RBOB – it is not the most liquid market in the futures complex.
Dec 17/Dec 18 RBOB
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