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Which Wheat Put to Buy? Tech Guy's Opening Calls. 04/07/2022

May Wheat: Steady to 1 higher

May Corn: Stedy to 1 higher

May Beans: 1 to 3 lower


 

Tech Guy’s Comments:

Corn and beans continued to show strength today. The $7.00 area in December corn held as expected. I look for continued strength moving forward overall.

May crude oil: the 30-minute chart below depicts the declining wedge formed over the last 7 trading days in the context of a larger horizontal line (red) which is across the March 15th low of $93.54, which is a support level. The low for May crude oil today was $93.81; it settled at $96.03!

Over the last 24 hours, an expanding triangle formed with 3 swing lows and the 3rd one poking down a bit more. The big spec fund buyers were buying a big volume of contracts in this area. Most all of the funds trade using technical analysis to guide them. They would not allow the May crude price to trade to $93.54.

I look for price to test the $99 area above and probably continue up to the $102 to $104 area. The odds favor price strength through the end of May.

Please take some time to study the crude chart. It is good stuff.


 

About Which Put Option to Buy...


From a client:

I am curious what strike price you would recommend. 75-$1.00 premium (per bushel) can add up quick!

Note: premium is the value (cost to buy & value to sell) each bushel of an option; one option is 5,000 bushels.

The margin for a CBOT wheat futures is $5610, which is $1.12 per bushel, so let's start with that.

Clearly, if the market goes down, one will make more money with a futures contract than an option, but with a lot more risk.

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