Futures Measures

Grain Futures: Trading Corn & Soybeans

Futures Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

If you missed yesterday's segment where we examined Old Crop vs. New crop and learned how to place a ratio spread with grain futures, then check it out here. This episode will recap you on that trade and show you how to place the same trade with options on futures.

Corn/Soybeans Spread Using Futures on Options

Because trading the mini contracts for corn (/XC) and soybeans (/XK) is nearly the same as the corn/soybeans trade from the last episode (but using significantly less buying power (about 80% less), we will focus on how to trade this spread with options on futures.

To do so, we will place a put spread (2 contracts), and a call spread to take advantage of the high implied volatility that the market is presenting us. The put spread will be placed about $50 out of the money and the call spread will be placed about $95 out of the money. This trade gives us very little delta exposure (about 1/10 of a percent).

Strategies: Ratio Spread (Options on Futures)
Products Discussed In This Episode: /ZC, /ZS

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