Corn/Oat Spread: Cancel the Short Sale Order…For Now

Head For the Sidelines

The IMC blog has been working an order to short the September corn/oat (x2) spread on a rally to ‘even money’.  With the First Notice Day coming up the day after tomorrow, we are going to withdraw the order to short the September spread.

December Corn Oats (x2) spread daily

December Corn Oats (x2) spread daily

The December spread has never been to the even money mark.  If we went short up there, we would be fading a breakout to new highs.  It seems that the more prudent course of action would be to monitor the December corn/oat (x2) spread and see what happens if/when it reaches the ‘even money’ mark.  Then we can decide if we should get short at that point or sit on our hands if it’s still rocketing higher.

Trade Strategy:

Cancel the hypothetical order to sell one 5,000 bushel September corn contract and simultaneously buy two 5,000 bushel September oat contracts at ‘even money’. 

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