Grain Basket Spread: Out With a Profit

The Basket is Now Empty

On July 14th, we initiated a hypothetical long position in the Nov-Dec 2016 Grain Basket spread by purchasing one long November 2016 soybean contract and then shorting one December 2016 wheat contract and shorting one December 2016 corn contract at a price of approximately -61 1/2 cents (premium the sum of the wheat and corn).

Today we liquidated the position at a price of approximately -23 cents (premium the sum of the wheat and corn). This resulted in a profit of approximately +$1,925 per spread, not including commissions.

Nov-Dec 2016 Grain Basket spread dailyThe narrowing range of the last few months caused us to lower our exit target to a close at -30 cents or higher. This was triggered today. Now we are going to cool our heels on this spread for a while. To get us interested in a new position, the Nov-Dec 2016 Grain Basket spread or the July 2017 Grain Basket spread will have to drop to at least -$1.00 (premium the sum of the wheat and corn) or rocket to at least +$1.50 (premium beans). If that happens, we will start forming a game plan. Until then…

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