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December 13, 2022

 

MANY years ago I started putting personally formulated trading reminders on the walls of my office…those reminders basically being one line rules that I believe were critical to remember regarding this business of trading futures. I’ve included four of them (of seven total) in this newsletter as an intro to why I think the trade outlined here could be an absolute killer.

I don’t care what market it is. I believe that these rules hold true for all of them…

Summation: The highest percentage trade I know is to get on a market that has been consolidating sideways (in a trading range) for a lengthy period (the longer the better)…that has then either made new highs or new lows out of that consolidation…And as noted, especially if it’s to the downside…as commodity markets have a decided tendency to go down a lot bigger and faster than they go up…So when you get a market “breaking” down out of that range, YOU GET ON IT…and then do everything you can to just let it happen.

Forever and ever…With the leverage we have in buying futures options, being on, and staying on, one market that is truly going somewhere can produce stunningly big percentage profits…In other words, I am in this business to make multiples, not single digit percentages, and I therefore do not make any recommendation unless I can see that sort of major potential…That being said, I am obligated to also state that when I am wrong, you could lose every dollar you have on the table.

 

Just what both lines indicate…Markets go up, down and sideways…The simple (it seems) objective is to be riding “with it” when it does have a direction, which can be in the form of an obvious trend, or, as noted previously, when it is leaving a consolidation…and the easiest, and “best way” is to just get on the horse in the direction that it appears to be running…and then, one more time, “just let it happen.”

For sure, nothing of what I’ve written above guarantees success, and there are certainly any number of other factors that are relevant (like markets at severely extreme highs or lows), but for my money, those four “reminders” do describe exactly what I currently see in the Soybean Complex…and specifically, right now, with Soybean Oil, which today made new 8 month lows after hitting its highest prices EVER in May. And, I would add, this market is making these new lows with every analyst I have seen all year STILL endlessly touting nothing but Soybean Oil’s “bullish fundamentals.”

So yeah…SOYBEAN OIL IS THE MARKET I IMMEDIATELY WANT TO BE SHORT…AND I AM LOOKING FOR A BIG, BIG MOVE…SO I CONTINUE TO RECOMMEND BUYING PUTS…REALLY, IN ANY MONTH YOU WANT TO DO IT IN.

Here are the charts for perspective…and an option I like right here…right now…today or tomorrow.

CASH MARKET SINCE 1962

 SPOT FUTURES THE PAST FEW YEARS…

 MARCH 2022 SOYBEAN OIL

BUYING THIS OPTION HERE…

Those of you who have known me for a while will understand what I mean when I refer to  this as being like my Amazon River trade (in reverse)…That you put the money on the table and forget you are in the market. Really…This might not work but I do think the percentages here are just about as high as they ever get.

I urge you not to just watch this happen...And I do see this as quite similar to the Eurodollar market just two months ago…when NOBODY was expecting that market to start moving…to immediately (then) start reflecting the idea of rates starting higher…Just as now, NOBODY is even remotely suggesting a bear market in the Soybean Complex.

Get in touch if you’re interested…and READY to go.

Thanks,

Bill

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Soybean Oil

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