Corn short Expecting price to go a little up in order for me to go short
Fundamentals giving sell signals
Let’s see how it goes
CORNH2025 trade ideas
Short Idea On ZC1! (Corn)1)On Cot data,we can see the commercials shorting at the extremes.
2)Seasonality gives us a short bias and quantitative data shows 80% win rate for shorts.
3) We overvalued on daily and weekly timeframe against several benchmarks
4) On weekly timeframe,the price rejected the EMA Forming a Pin bar reversal
5) I set the entry and stoploss on the supply structure as you can see in the picture
ZC1!, Long, 4h✅ ZC1! has rejected a key support level three times and is now testing it for the fourth time. This strong support zone suggests that the price is likely to see a short-term increase.
LONG 🚀
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Corn Prices Hit 15-Month High as La Niña Threatens South AmericaCorn futures for March-25 trades near the key $5/bu area, setting a 15-month high, on worries over dry Argentine weather and lower US carryout at the end of the current crop year. The Oceanic Nino Index points to an incoming La Nina which normally brings persistent dryness to Argentina and southern Brazil, potentially worsening crop conditions, with expectations for Argentina’s corn and soybean crops already suffering a series of downgrades.
The Egg Crisis in the U.S.: Impact on the food sectorBy Ion Jauregui - ActivTrades Analyst
The United States is in the midst of an unprecedented crisis in the poultry sector. The rapid spread of avian flu has resulted in the death of more than 20 million laying hens, which has drastically reduced egg production. This scenario has led to acute shortages and a marked increase in prices: some supermarket chains have imposed purchase limits, and the price per dozen has reached record levels.
Evolution of the Avian Crisis
The outbreak began in February 2022, but as the virus spread exponentially, its impact became increasingly noticeable. With each week, the number of affected hens increases, and it takes, on average, half a year for farms to return to normal production. This drop in production has altered market supply, generating strong upward pressure on prices and forcing the sector's players to rethink their strategies.
Impact on the Supply Chain and Prices
The crisis has generated chain effects that affect both primary production and product distribution:
- Falling production: The massive loss of hens jeopardizes the ability to replenish supply in the short term.
- Increased costs: High biosecurity and animal replacement expenses raise operating costs, which translates into higher prices for the end consumer.
- Chain disruptions: Shortages affect the entire supply chain, from producer to retailers, increasing market volatility.
Listed Companies Directly Affected
The egg crisis directly impacts companies operating in the poultry sector. Among the most relevant are:
- Cal-Maine Foods, Inc (NASDAQ: CALM): As the largest egg producer in the United States, Cal-Maine is at the epicenter of the crisis. The drastic reduction in production and rising costs to restore its production capacity may put pressure on its margins and generate volatility in its financial results.
- Tyson Foods, Inc. (NYSE: TSN): Recognized primarily for its meat production, Tyson Foods also operates in the poultry sector and in the egg products supply chain. Raw material shortages and high operating costs may negatively impact the company's profitability.
- Pilgrim's Pride Corporation (NASDAQ: PPC): Another large player in the industry, Pilgrim's Pride, faces similar challenges. The crisis translates into higher biosafety costs and a disruption in production, which may affect its stock market performance.
Indirectly Affected Listed Companies
In addition to companies directly involved in egg and chicken production, other companies could be indirectly affected due to effects on the supply chain and food prices:
- Sysco Corporation (NYSE: SYY): As a major food distributor to the foodservice and hospitality industry, Sysco could face margin pressures due to rising input prices, including eggs, impacting its commercial agreements and customer contracts.
- Darden Restaurants, Inc (NYSE: DRI): This restaurant group, which owns well-known brands, is being forced to adjust its menus and prices in response to rising commodity prices. Egg-containing dishes could suffer cost changes, affecting the restaurant industry's profitability.
- Kroger Co (NYSE: KR): As one of the largest food retailers in the United States, Kroger faces pressure to manage an increase in commodity prices. Egg shortages may lead to higher restocking costs and adjustments in pricing strategies, which could affect its profit margins.
Corn and Animal Feed
- Poultry feed: Corn is the basis of the diet of laying hens. When a crisis, such as avian flu, drastically reduces the poultry population and thus egg production, the demand for corn to feed these birds tends to decrease.
- Impact on the supply chain: Lower egg production can lead to farms purchasing less corn, which in principle could reduce pressure on the grain market. However, this effect is influenced by other factors.
Factors Driving Corn Prices.
- Supply constraints: Adverse weather conditions, such as droughts in key production regions, have depressed crop yields. Water shortages and other agronomic problems have limited production, reducing available supply and putting upward pressure on the price.
- Global increase in demand: Although the egg crisis may reduce demand in the poultry sector, global demand for corn remains high due to its use in biofuel production (such as ethanol) and in the food industry. This robust global demand contributes to sustaining high prices.
- Input and logistics costs: The increase in the price of fertilizers, fuels and other inputs makes corn production more expensive. In addition, disruptions in the supply chain and high logistics costs are passed on to the final price of the grain.
- Geopolitical factors and speculation: Trade tensions and volatility in international markets, along with speculation in futures markets, have contributed to corn prices remaining at peak levels, despite fluctuations in poultry demand.
The interrelationship between the egg crisis and corn prices illustrates how, despite a possible decrease in demand in the poultry sector, external and structural factors have prevailed to boost corn prices. In this context, the reduction in poultry consumption is offset (or even outweighed) by reduced supply, increased global demand and higher production and logistics costs, which has driven corn to record highs during the year.
Corn Analysis (AT Ticker: CORN)
- Price Evolution: During this year, corn has shown a strong performance, starting the year up 11.14%. Its price range has been moving from support at $471.75 (recorded on February 3) to record highs of $498 per bushel that same week. The current bullish channel does not seem to have been broken but consolidated, the current momentum seems to be looking to test new support zones at $484.25 to test the current high. RSI indicates oversold at 40.18%. The control point (POC) seems to be marking the price around $490. Looking at the average crosses, there have been a number of average crosses this month in different directionalities. In the Asian day there has been a crossover of averages in which the 50 has surpassed the 100 and the 200, and the 100 is moving in the same bearish direction, so there could be a correction that sends the price to the minimum range.
- Balance between demand and supply: While the egg crisis could suggest a reduction in demand for feed corn, the other factors - supply constraints, high global demand, rising costs and geopolitical factors - have exerted a dominant pressure driving prices to record highs. This crisis may now be correcting the price of corn in a more profound way than is at first glance considered, as a matter of supply and demand.
Conclusions
The egg crisis in the United States, driven by the rapid spread of avian flu, has generated a critical imbalance in the market: the drastic reduction in the poultry population has caused a historic shortage of eggs and a significant rise in their prices, directly affecting companies in the sector such as Cal-Maine Foods, Tyson Foods and Pilgrim's Pride. At the same time, this situation indirectly affects the food supply chain, impacting distributors and retailers (Sysco, Darden Restaurants, Kroger), which face increased costs, operational uncertainty and volatility throughout the supply chain, affecting the end consumer. I
n this complex scenario, the price of corn plays a determining role. Although corn is an essential input for chicken feed, the decrease in poultry demand could suggest a drop in consumption; however, external factors -such as supply restrictions due to adverse weather conditions, a robust increase in global demand (also destined for biofuels and other industries), higher input prices and geopolitical volatility- have driven corn prices to record highs. With an initial rise of 11.14% and support movements from US$ 471.75 to US$ 498 per bushel, the bullish channel has consolidated, although there are technical signs of a possible correction that could test new support levels.
In short, the interaction between the egg crisis and the corn market illustrates how multiple factors - both internal to the poultry sector and external in the global economy - converge to shape a highly volatile scenario and significant challenges for the actors involved. This conjuncture will force companies to rethink their strategies and investors to act with caution, in an environment marked by uncertainty and interdependence of food and agricultural markets.
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What Lies Beyond the Cornfield's Horizon?The narrative of corn in the global agricultural scene is not merely about sustenance but a complex ballet of economics, innovation, and policy. This staple crop stands at the intersection of international trade, with U.S. farmers gaining a foothold in Mexico's market through a significant legal victory against GMO corn restrictions, highlighting the nuanced dance between technology and trade agreements. Meanwhile, Brazil's agricultural strategies reveal a shift towards leveraging corn for ethanol, showcasing a potential future where corn could play an even more pivotal role in sustainable energy solutions.
In science and technology, the development of digital corn twins presents a frontier in crop breeding. This innovative approach could redefine how we think about plant resilience and efficiency, potentially leading to crops tailored to withstand the capricious whims of climate change. The challenge lies in translating theoretical models into practical, field-ready solutions that can benefit farmers and consumers alike.
However, the journey isn't without its threats. The unexpected rise of corn leaf aphids in 2024 serves as a stark reminder of the ongoing battle with nature's unpredictability. Farmers are now challenged to anticipate and manage these pests, pushing the boundaries of traditional farming practices into more predictive, data-driven methodologies. This situation beckons a broader inquiry into how agriculture can evolve not just to react but preemptively adapt to ecological shifts.
As we look beyond the cornfield's horizon, we see a landscape where policy, technology, and biology converge. The future of corn involves navigating this triad with foresight, ensuring that each step taken today not only secures current yields but also plants the seeds for a sustainable agricultural legacy. This exploration into corn's evolving role invites us to ponder how we can harness these developments for a future where food security and environmental stewardship walk hand in hand.
Can The Grain Market Rally Continue?Outside of the typical financial markets traders may track, the agricultural markets have had an interesting start to 2025. Looking at the March Corn contract, traders saw significant selling pressure in 2024 and Corn has struggled to climb back over the $5.00/bushel mark. Since the August 2024 lows, Corn has seen a slow grind higher with some significant chop back and forth and crossed back over the 200-day moving average, which has kept a lid on prices for the market going back to 2023.
When looking at agricultural products such as corn or soybeans, there are many different catalysts that can shift the market in one direction or another. Traders can look at seasonality of the crop, weather conditions in the United States and South America that may impact the future supply of the crop, or many other outside factors that may affect the price. The CME offers Corn and Soybean futures contracts represented as 5,000 bushels in the full sized contracts, and also a mini contract representing 1,000 bushels of the desired crop, again giving traders their choice of size.
If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*CME Group futures are not suitable for all investors and involve the risk of loss. Copyright © 2023 CME Group Inc.
**All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
Behind the Curtain: Economic Indicators Shaping Corn Futures1: Introduction
Corn Futures (ZC), traded on the CME, play a vital role in global markets, particularly in the agriculture and food industries. As a commodity with widespread applications, Corn Futures are influenced by a multitude of factors, ranging from seasonal weather patterns to broader economic trends. Understanding these influences is critical for traders seeking to navigate the market effectively.
In this article, we leverage machine learning, specifically a Random Forest Regressor, to identify key economic indicators that have historically correlated with Corn Futures' price changes. By analyzing daily, weekly, and monthly timeframes, we aim to provide a clearer picture of how these indicators potentially shape market behavior and offer actionable insights for traders.
The findings are presented through visual graphs highlighting the top economic indicators across different timeframes. These insights can help traders fine-tune their strategies, whether for short-term speculation or long-term investment.
2: Understanding the Key Economic Indicators
Economic indicators provide a glimpse into various facets of the economy, influencing commodity markets such as Corn Futures. Using the Random Forest model, the following indicators emerged as significant for Corn Futures on different timeframes:
Daily Timeframe:
Oil Import Price Index: Reflects the cost of importing crude oil, impacting energy costs in agriculture, such as fuel for equipment and transportation.
Durable Goods Orders: Tracks demand for goods expected to last three years or more, often signaling broader economic activity that can influence commodity demand.
Natural Gas Prices: Critical for the production of fertilizers, which directly impacts corn farming costs.
Weekly Timeframe:
China GDP Growth Rate: Indicates global demand trends, as China is a major consumer of agricultural products.
Housing Starts: Reflects construction activity, indirectly influencing economic stability and consumer behavior.
Corporate Bond Spread (BAA - 10Y): A measure of credit risk that can signal changes in business investment and economic uncertainty.
Monthly Timeframe:
Retail Sales (YoY): Gauges consumer spending trends, a crucial driver of demand for corn-based products.
Initial Jobless Claims: Acts as a measure of labor market health, influencing disposable income and consumption patterns.
Nonfarm Productivity: Indicates economic efficiency and growth, impacting broader market trends.
By understanding these indicators, traders can interpret their implications on Corn Futures more effectively.
3: How to Use This Information
The timeframes for these indicators provide unique perspectives for different trading styles:
Daily Traders: Indicators like the Oil Import Price Index and Natural Gas Prices, which are highly sensitive to short-term changes, are valuable for high-frequency trading strategies. Daily traders can monitor these to anticipate intraday price movements in Corn Futures.
Swing Traders (Weekly): Weekly indicators, such as the China GDP Growth Rate or Housing Starts, help identify intermediate-term trends. Swing traders can align their positions with these macroeconomic signals for trades lasting several days or weeks.
Long-Term Traders (Monthly): Monthly indicators, such as Retail Sales and Nonfarm Productivity, provide insights into overarching economic trends. Long-term traders can use these to assess demand-side factors impacting Corn Futures over extended periods.
Additionally, traders can enhance their strategies by overlaying these indicators with seasonal patterns in Corn Futures, as weather-related supply shifts often coincide with economic factors.
4: Applications for Risk Management
Understanding the relationship between economic indicators and Corn Futures also plays a critical role in risk management. Here are several ways to apply these insights:
Refining Entry and Exit Points: By correlating Corn Futures with specific indicators, traders can potentially time their entries and exits more effectively. For example, a sharp rise in the Oil Import Price Index might signal increased production costs, potentially pressuring corn prices downward.
Diversifying Trading Strategies: Leveraging daily, weekly, and monthly indicators allows traders to adapt their strategies across timeframes. Short-term volatility from energy prices can complement long-term stability signals from broader economic metrics like GDP Growth.
Mitigating Uncertainty: Tracking indicators such as Corporate Bond Spreads can provide early warnings of economic instability, helping traders hedge their Corn Futures positions with other assets or options.
Seasonal Hedging: Combining indicator-based insights with seasonal trends in Corn Futures can enhance risk-adjusted returns. For instance, aligning hedging strategies with both economic and weather-related factors could reduce downside exposure.
5: Conclusion
The analysis highlights how diverse economic indicators shape Corn Futures prices across multiple timeframes. From daily volatility influenced by energy costs to long-term trends driven by consumer spending and productivity, each indicator provides unique insights into market dynamics.
Traders can use this framework not only for Corn Futures but also for other commodities, enabling a more data-driven approach to trading. The combination of machine learning and economic analysis presents opportunities to refine strategies and improve outcomes in the competitive world of futures trading.
Stay tuned for the next article in this series, where we delve into another futures market and its relationship with key economic indicators.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Corn BullishKey Factors:
1️⃣ Technical Setup: The price has bounced off the 0.618 Fibonacci retracement level, historically a strong reversal zone. RSI is also pointing to bullish momentum.
2️⃣ Fundamentals: Increasing demand and reduced supply due to adverse weather conditions could further support price growth.
3️⃣ Historical Trends: Previous rallies from similar levels indicate a potential target near the 0.5 and 0.382 Fibonacci zones.
CORN wants to explode for a brief moment!Structure is screaming i need help! for the resistance.
We have broken upward the local range and local POC has become a support
Every evidence is pointing upward.
Corn - Back into Stable RangeWhen the 441'0 historical resistance level is reached from below after having not been approached from below in at least a few months, it has served as resistance 5 out of the last 8 times. The theory here is that it will serve as resistance again and that corn will fall back into the "stable range" of 316' to 441'. There is a downtrend channel which also is serving as resistance. If the bearish theory fails, the upside potential is significant. Downside and upside targets are shown on the chart. This is one to watch and see how it plays out on hourly/daily TFs with a bearish bias. I'm bearish below 441', cautiously bullish above. No trade entry at this point.
Corn Futures: New All Time Highs Ahead 10x potential CBOT:ZC1! Straight forward MACRO LONG to new ALL TIME HIGH. Easy 2x upside to previous all time high within a year and 5-10x upside within the next couple of years. There is a huge fair value gap or unbalanced zone to the upside (yellow) to be filled. The 3 month chart has finally started to show signs of reversal as price retraced to a key high volume zone (gray) and printed a bullish hammer candle.
Weekly timeframe is lacking strength and looking like it wants to retest the low $400's. Rather wait for a further retrace or jump in upon a break of previous highs.
The Corn Comeback: How High Will it Go!??🌽 Corn CBOT:ZC1!
Macro timeframe is showing strength.
The weekly RSI is back above the 50 EQ.
Last weekly candle closed with a bullish range expansion and engulfing bar. Now price has retraced and we are currently standing at the ideal re-entry point.
Entry market buy and dca now towards the stop.
Stop: $409
Target: $475
Options Blueprint Series [Basic]: Corn Futures and PPI InsightsIntroduction to Corn Futures Market Sentiment
Corn Futures are capturing the interest of traders as technical indicators and economic fundamentals align in a potential bullish setup. Currently, the Corn Producer Price Index (PPI) shows a Commodity Channel Index (CCI) bullish crossover, indicating a possible uptrend in prices. Corn Futures have followed suit with an earlier CCI bullish crossover, adding strength to the view that Corn prices could see upward momentum in the coming months.
As Corn Futures reflect early signals of a shift in market sentiment, this article explores a straightforward yet effective Bull Call Spread strategy using June 2025 options. By leveraging these CCI signals and key resistance levels, traders could position themselves to benefit from a potential rise in Corn prices while maintaining a controlled risk profile.
Corn Futures Contract Specifications and Margin Requirements
Understanding the specifications of Corn Futures is essential for managing both position size and margin requirements effectively. Here’s a quick breakdown:
Price Tick Size: The minimum fluctuation is 0.0025 cents per bushel, equivalent to $12.50 per tick.
Margin Requirement: Approximately $1,000 per contract, although this can vary based on broker and market conditions.
Analysis of Key Indicators and Market Setup
Two primary indicators support the bullish case for Corn Futures: the CCI bullish crossover in both the Corn Futures and the Corn PPI. The CCI, a momentum-based indicator, identifies potential trend reversals by highlighting overbought and oversold conditions. The recent CCI bullish crossover in Corn Futures suggests early buying pressure, while the subsequent crossover in the Corn PPI confirms this trend on the economic front.
This alignment between technical and economic indicators provides a potentially unique opportunity for options traders to capture potential upward movement, particularly as Corn prices approach critical resistance levels in front of a potential breakout.
Identifying Key Resistance Levels for Corn Futures
Resistance levels play a crucial role in setting realistic targets and managing expectations. In the current Corn Futures landscape, the primary resistance level for the front contract is observed around 550. For our target contract, ZCN2025 (July 2025), this resistance translates to approximately 485 due to the effects of contango/backwardation.
These resistance levels serve as benchmarks for setting exit targets in a Bull Call Spread. If Corn prices rally towards this zone, it could provide a favorable exit opportunity while maintaining a controlled risk-to-reward structure.
The Bull Call Spread Strategy Setup
In this setup, we employ a Bull Call Spread using options with a June 20, 2025, expiration date. This strategy is ideal for capturing moderate upside movement while limiting downside risk through a capped loss. Here’s the specific setup:
Long Position: Buy the 460 Call for a premium of 25.41.
Short Position: Sell the 490 Call for a premium of 15.87.
By buying the 460 Call and simultaneously selling the 490 Call, we establish a Bull Call Spread that allows us to benefit from price increases up to the 490 strike level. This setup reduces the net cost of the trade while capping the profit potential at the 490 strike price, aligning with our outlook based on resistance levels.
Net Premium (Cost): 25.41−15.87=9.54.
Reward-to-Risk Analysis
A Bull Call Spread provides a straightforward way to define both maximum profit and loss at the outset. Here’s a closer look:
Maximum Profit: Achieved if Corn Futures price rises to or above the 490 strike level at expiration = (490−460)−9.54=20.46.
Maximum Loss: Limited to the net premium paid = 9.54.
Breakeven Point: 469.54, calculated by adding the net premium to the 460 strike.
This structure results in a reward-to-risk ratio of approximately 2.14:1.
Forward-Looking Trade Plan and Execution Strategy
This Bull Call Spread strategy is structured with specific entry and exit conditions in mind:
Entry Condition: Triggered once the ZC1! (continuous Corn Futures contract) surpasses the prior month’s high at 434'2. This confirmation aligns the technical breakout with the ongoing bullish trend indicated by the CCI and PPI crossovers.
Target Exit: Based on the resistance level, the target for this trade is 485 on the ZCN2025 contract. Reaching this level would allow for a strategic exit with a maximum profit potential.
Alternative Exit: If Corn Futures prices fail to sustain the breakout or if technical indicators weaken significantly, an early exit can be considered to limit losses or preserve gains.
By setting these clear parameters, the trade plan maintains discipline, helping traders avoid reactive decision-making and align with the predefined strategy.
Risk Management Essentials
Effective risk management is crucial, especially when trading options. Here are some best practices:
Stop-Loss Strategy: For options traders, a stop-loss can be set based on a percentage of the premium paid or by monitoring underlying futures price action.
Position Sizing: Limit the size of the position relative to the account balance to avoid overexposure. This is especially relevant for volatile markets like Corn.
Discipline and Emotional Control: Stick to the plan, avoid emotional reactions to market noise, and adhere to entry and exit conditions.
Risk management ensures that even if the trade does not perform as expected, losses are limited and capital is preserved for future opportunities.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. Also, some of the calculations and analytics used in this article have been derived using the QuikStrike® tool available on the CME Group website.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Bullish time in CORN ahead \o/You can see here the CBOT:ZC1! price displayed in a line chart. After reaching its high in early 2022, the bears took control, driving the price down significantly until now.
The factors in play are as following:
Seasonality: Corn prices have historically shown strength from December through March, aligning with planting and crop cycles. This seasonal trend could provide a solid backdrop for a potential price recovery. (highlighted in green on the chart)
Interest Rates: We’ve reached a pivotal moment in the Federal Reserve's interest rate cycle. The rate hikes that began in March 2022 coincided with the start of the bearish trend, while recent rate cuts in September 2024 may support a rebound in commodity prices, including corn. This shift in monetary policy could act as a bullish catalyst for corn and other commodities. (highlighted in orange on this chart)
Technical Indicators: For additional confirmation, one could wait for a bullish crossover of the moving averages (a golden cross). Such a cross would reinforce the technical setup and definitively signal the onset of a new bull market in corn.
With these factors in play, corn could be setting up for a strong rally in the months ahead.
Children Of The CornCorn Should go Up. exponential m.a. is popping. Wanted to do some Futures type here. This should be a decent, Steady gainer.
~Careful not to step on corn-flakes, you wouldn’t want to become a cereal-killer.
~The corn stalk decided to change careers. He went into a completely different field.
~Plain popcorn? I’m sorry, but you're going to have to do a lot butter than that.
This One should mint us some Green...
COT Analysis - Grains ZL & ZCZL & ZC are fundamentally setup for shorts if we get a confirmed daily bearish trend change.
I like ZL more than ZC, for reasons outlined in the video.
Have a good week.
Riding the Corn Swing TradeCBOT:ZC1! LONG trade signal triggered. Price has shaken off weak hands by taking liquidity off the lows. We have now a bullish hammer candle and we just made a higher high on lower timeframe.
DCA entry as close to $400’s
Stop tight at $399
Target mid $430’s
Corn Reversal: Classical 5 bar trend confirmed!Corn CBOT:ZC1! is showing signs of a reversal, and it has confirmed the following:
The daily trend was activated at yesterday's close, with enough momentum to push above 450.
The weekly trend is also active, following a classic five-bar trend pattern, indicating a strong reversal signal.
Once it reclaims 433, it should quickly move toward the first target of 466.
If everything aligns as expected, it could aim for a break of the current trend. For now, it’s important to take it level by level.
Corn Futures
Prices tested the upper Bollinger Band near 4400 in late September and early October, which acted as resistance.
The market has since pulled back from this level, signaling a rejection of higher prices at this point.
The price is now around 4156, and the 4100 level seems to be acting as a near-term support.
The widening of the Bollinger Bands in the past months suggests increased volatility, especially during the downtrend.
The market appears to be in a corrective phase after a sharp downtrend, with potential support around 4100 and resistance near 4400.
A break below 4100 could signal a continuation of the downtrend, while a breakout above 4400 might suggest further recovery toward higher levels.
Watch for narrowing Bollinger Bands, as this could signal a volatile move in the near future.
COT Analysis - GrainsA very quiet week for COT setups.
This week, Corn is still a setup market for shorts. This video goes into why I am looking to short Corn if I get one of my 3 entry triggers.
Have a great weekend.
15% to 35% Upside Ahead for Corn (Divergence Strategy)Corn recently has had the monthly bullish divergence confirmed with Septembers monthly close. This has major implications for corn, as I anticipate corn to now trade up at least 15% from current prices, up to a max move of approximately 35%. Monthly divergence triggers such as this are signals that the prudent trader must pay attention to. This does not mean I anticipate this market to go straight up from here. However, it does mean that, in my opinion, dips are for buying in the Corn market until we reach these upside targets.
Have a great week.
Options Blueprint Series [Advanced]: Reverse Time Iron Condors1. Introduction
In today’s advanced options trading discussion, we introduce a unique structure—"Reverse Time Iron Condors"—using Corn Futures Options (ZCH2025). This sophisticated strategy leverages options with different expiration dates, allowing traders to position themselves for a potential market move in the mid-term.
The Corn market has recently shown signs of slowing momentum, as indicated by technical indicators such as ADX (Average Directional Index) and RSI (Relative Strength Index) applied to ADX. Our analysis shows that RSI applied to ADX is oversold, and RSI is approaching a key crossover signal that could confirm an increase in volatility. Given this setup, the Reverse Diagonal Iron Condor (a.k.a. Reverse Time Iron Condor) structure aligns well with the market’s current conditions over two expiration cycles.
CME Product Specs (Corn Futures ZCH2025)
Contract Size: 5,000 bushels per contract.
Tick Size: 1/4 cent per bushel (0.0025), or $12.50 per tick.
Required Margin: USD $1,200 per contract at the time of producing this article.
2. Market Setup & Analysis
To understand why the Reverse Time Iron Condor is suitable for Corn Futures right now, let’s delve into the technical picture:
ADX Analysis: Corn Futures’ Daily ADX has been dropping, indicating weakening momentum. This signals a period of consolidation, where price volatility remains low.
RSI of ADX: By applying the RSI to the ADX values, we notice that ADX is now oversold, suggesting that momentum could soon pick up.
RSI Crossover: The RSI is nearing a crossover above its moving average, confirming that a new impulse in momentum would be in the process of potentially occur. This technical picture suggests the market could stay in a low-volatility phase for now but break out in the near future.
Based on this technical setup, the strategy we present is to capitalize on the short-term consolidation while preparing for a potential breakout, using the Reverse Diagonal Iron Condor structure.
3. Strategy Breakdown: Reverse Diagonal Iron Condor
The Reverse Diagonal Iron Condor is a unique options structure where you sell longer-term options and buy shorter-term options. This setup generates a negative theta position, meaning time decay works slightly against the trader. However, the strategy compensates for this through positive gamma, which accelerates the delta as the underlying market moves, especially during a breakout. This combination allows the position to profit from a sharp move in either direction, with relatively limited cost.
For this trade on Corn Futures (ZCH2025), the structure is as follows:
Sell 450 Call (21 Feb 2025), Buy 455 Call (27 Dec 2024): This creates a short diagonal call spread, where the February short call decays slowly due to the longer expiration, and the December long call acts as a short-term hedge against an early rise in prices.
Sell 410 Put (21 Feb 2025), Buy 405 Put (27 Dec 2024): Similarly, this forms a short diagonal put spread. The February short put is subject to less time decay, while the December long put protects against a sharp downward move before its expiration.
Key Mechanics:
Time Decay (Theta): Although the trade has negative theta, the impact of time decay is relatively small because the February options decay slowly due to their longer-term expiration.
Gamma and Delta: The positive gamma in this position means that if a breakout occurs before the December expiration, the delta will increase significantly, making the trade more sensitive to price changes. This could more than offset the negative theta, allowing the trade to capture large gains from a significant price move.
Objective:
The goal is for Corn prices to experience an impulsive move (either up or down) before the December 2024 expiration of the long legs, allowing the positive gamma to boost the position’s delta. If this breakout occurs, the potential profits from the price move will likely surpass the small losses due to time decay. The structure is ideal for markets in consolidation that may be on the verge of a volatility surge, as the falling ADX and oversold RSI suggest.
This strategy is particularly well-suited for Corn Futures (ZCH2025), given the current technical setup, where a near-term consolidation phase might be followed by an explosive move in either direction. The success of this trade relies on a timely breakout occurring before the December expiration, after which the position may need adjustment to manage risk.
4. Risk Profile at Initial Setup
The initial risk profile for this trade reminds us of an Iron Condor risk profile, with the best case being a range-bound corn market between 410 and 450.
Important Consideration: This risk profile does not reflect the final outcome because the trade spans two different options cycles. The December options will expire first, which means adjustments may be necessary after that expiration to maintain protection.
Note on Options Simulation Tool:
It's important to mention that the options simulation tool provided by TradingView is currently still in its beta stage. While it offers useful insights for analyzing and visualizing options strategies, traders should be aware that certain features may be limited, and results might not always reflect all real-world conditions. For a more comprehensive analysis, it is recommended to complement the simulation with other tools such as the Options Strategy Simulator available in the CME Group website.
5. Optional Trade Management After December Expiration
Once the December 2024 long options expire, you will face two possible scenarios. In both cases, managing the February 2025 short options is crucial:
o Scenario 1: Corn Prices Remain Range-Bound:
If Corn futures continue to trade within the 450-410 range, the December long options will expire worthless.
In this case, the strategy shifts to managing the February short options, which will benefit from time decay. Monitor the market closely and consider whether to buy new protection for the remaining February short options.
o Scenario 2: Corn Prices Break Out:
If Corn futures break above 450 or below 410 prior to the December expiration, the February short options could expose the position to significant risk if we allow them to expire.
One potential action is to purchase new long options within the range (for example, buy the 445 call and the 415 put using 21 February 2025 expiration). While many other actions could be valid, a common and probably the simplest approach could be to close all legs in time for a likely profit at this moment.
6. Risk Management
Effective risk management is essential in any options strategy, especially one as advanced as a Reverse Diagonal Iron Condor. Below are key points to ensure this trade stays within your risk tolerance:
o Position Sizing:
Given the complexity of this trade, ensure that the size of your position fits within your overall risk management plan. Avoid over-leveraging, as unexpected price movements can lead to significant losses once the December long options expire.
o Monitor Key Levels:
Keep an eye on the 450 strike (resistance) and 410 strike (support). If Corn breaks these levels early in the trade, consider closing the position or making adjustments.
o Volatility Management:
The success of this trade hinges on an increase in market momentum.
7. Conclusion
The Reverse Diagonal Iron Condor is an advanced options strategy where the long positions have a shorter expiration than the short positions, creating a negative theta position. Instead of benefiting from time decay as in a traditional Iron Condor, this strategy is designed to take advantage of expected volatility increases over time. By selling longer-term options and buying shorter-term options, traders are positioning themselves for a volatility breakout or significant price movement before the near-term options expire.
In this setup, time decay has a limited negative impact on the position, but the key advantage lies in the positive gamma. This means that if a breakout occurs, the position’s delta will accelerate, potentially outpacing the slight negative effect of theta. Traders should closely monitor the December expiration, as the success of the trade hinges on the anticipated large move happening before this date. This structure is particularly well-suited for Corn Futures (ZCH2025), given the falling ADX and RSI, which suggest a potential momentum shift. The strategy is designed to benefit from a significant price move with limited cost, assuming the breakout occurs within the timeframe of the December long options.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
