#1.1 Second Sale For Sugar

by admin on July 25, 2012

My second trade was done in a pretty fast manner. 😀
I followed 3 steps:

1) Read the blog from Smart Passive Cashflow where he mentioned the opportunity for Sugar with a seasonal trend in play.

2) Read another blog post from Michael Gross of the Liberty Trading Group where he mentioned several fundamentals are in play as well.

3) Did a quick research on the past 5 years Sugar prices and found that the low is roughly around 10 cents and highest at 36 cents.

So what is my trade?

1) My initial queue started 2 to 3 days before the order was filled.
The reason that I chose 16 cents to sell:
a) Due to the amount of premium I can collect.
(Premium equal 0.15 * 1120 [multiplier for sugar] = $168)
b) Based on the margin requirement at that point of time, I am able to get roughly 40% of return.
c) 16 cents is pretty near to the past 5 year low of 10 cents thus the upward pressure is higher than the downward pressure.

2) I placed an order to sell 16 cents put at limit 0.15 and buy 12 cents put at limit 0.01.
As you can see from the image below, this time round I placed an order based on the asking price and not the bidding price. If I were to placed the order based on the bidding price, I would have a filled immediately.
However this time round I decided to wait for the asking price.


3) The order was not filled until 30 May 2012.

4) Based on the first image, I closed the order on 19 Jun 2012 at 0.05 and made a profit of $93.97 (after deducting commission).

 

Disclaimer: The author is not a licensed financial advisor and the information is provided for educational and information purposes only.
Trading commodity futures and options have large potential rewards but also contains a high level of risk and is not suitable for all investors.
Only risk capital should be used when trading futures or options.
None of the information provided constitutes a solicitation of or a recommendation to buy or sell any futures or options contracts.
Please seek the advice of a professional financial advisor before investing your money in any financial instrument.

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