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ZW1! trade ideas

Is Wheat Making a Bottom?Wheat Technicals (September): September wheat futures are on the verge of getting out above the upper end of our pivot pocket, 815. If the Bulls can achieve a close above here, we could see the market make an attempt at last week’s highs, 834-843 ½. Bias: Neutral/Bullish Previous Session Bias: Neutral/Bullish Resistance: 834-843 ½***, 898 ½-903****, 960-970*** Pivot: 800-815 Support: 754-765 ¾**, 739-749*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZW1!
by OliverSloup_BlueLine
Wheat Futures Rally Wheat Commitments of Traders Update: Friday’s CoT report showed Managed Money were net sellers of 372 futures/options contracts through July 19th. This expands their net short position to 6,816 contracts. Broken down that is 61,465 longs VS 68,281 shorts. Fundamentals: As with the corn market, wheat futures are rallying this morning on concern that the deal to open up Ukrainian ports will not stand. This after Russia and Ukraine inked a deal on Friday. By Saturday morning, there were two missile strikes in Odessa. Technicals: September wheat futures were down another 17 ¾ cents last week, taking prices to their lowest level since the first week of February. Wheat futures are higher this morning, a silver lining for the Bulls, but they have their work cut out for them following the last several months of intense pressure. The first hurdle is to achieve a close out above the psychologically significant $8.00 handle. Bias: Neutral/Bullish Previous Session Bias: Neutral/Bullish Resistance: 839-849**, 898 ½-903****, 960-970*** Pivot: 800-815 Support: 765 ¾**, 739-749*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZW1!
by OliverSloup_BlueLine
wheatPrecipitation in the EU and the USA and the possible unblocking of Ukrainian ports increase the pressure on wheat prices Against the background of technical purchases, wheat futures on world exchanges rose yesterday: by 0.9% or $2.66/t to $301.1/t – September futures for soft winter SRW wheat in Chicago, by 0.1% or $0.46/t to $319.9/t – September HRW hard winter wheat futures in Kansas City, by 0.9% or €3/t to €340/t or $347.4/t – September wheat futures on Paris Euronext. At the same time, September futures for HRS durum wheat in Minneapolis fell by 0.5% or $1.93/t to $339.6/t, and August futures for Black Sea wheat in Chicago remained at 360.25 $/ton During the first 10 days of the new season, the EU exported 363,944 thousand tons of wheat, which is 24% more than the same figure last year. Today, the markets are waiting for the results of the negotiations on unblocking the ports of Ukraine and accurate data on the auctions in Egypt. However, one should not expect a sharp drop in prices from the decision to resume exports from Ukraine, since realistically supplies will not resume before September, and the daily shelling of Mykolaiv will not allow port terminals to work, especially those owned by foreign companies.
CBOT:ZW1!Short
by HOANGDANH88
Wheat Futures Conoslidate Wheat Fundamentals: This morning’s weekly export sales report showed net sales of 511,100 metric tons (MT) for 2022/2023 were down 50 percent from the previous week and 10 percent from the prior 4-week average. Technicals: Wheat futures are holding their own this morning, relative to the pressure we are seeing in corn and beans. We mentioned in recent Tech Talks that this could be the case. Corn and wheat have retraced a large portion of their higher move from the beginning of the year, which may help prices enter into more of a consolidation phase, near term. Bias: Neutral Previous Session Bias: Neutral Resistance: 839-849**, 898 ½-903****, 960-970*** Pivot: 800-815 Support: 739-749*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZW1!
by OliverSloup_BlueLine
Wheat futures linger near the low end of the rangeWheat Fundamentals: Yesterday’s weekly export inspections report came in at 185,989 metric tons, well below the 532,898 we saw in the same week last year. The weekly Crop Progress report showed good/excellent ratings for spring wheat at 71%. 68% of the crop is headed. Winter wheat harvest is 70% complete. Technicals (September): Wheat futures continue to consolidate near previous resistance levels and the psychologically significant $8.00 handle. If the Bulls fail to defend our pivot pocket, we could see the selling pressure pick back up. A close out above 815 would feel would have the opposite effect. Bias: Neutral Previous Session Bias: Neutral Resistance: 839-849**, 898 ½-903****, 960-970*** Pivot: 800-815 Support: 739-749*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZW1!
by OliverSloup_BlueLine
Updates of Options Strategy on Wheat FuturesCBOT:ZW1! On June 15th, I issued an options trading strategy on CBOT Wheat Futures. At the time, I expected wheat price to experience a very large move but was unsure of its direction. Consequently, I recommended a Long Strangle options strategy : Purchase both an out-of-money (OTM) call and an OTM put on September Wheat Futures. The original trading idea may be found here: . Let’s review how this trade performed five weeks after its initiation: Initial market conditions on June 14th: • September Wheat Futures (ZWU2) is quoted at $10.54/bushel. • An OTM call with a $12.00 strike price is quoted at 17 cents. • An OTM put with a $9.00 strike is quoted at 4.625 cents. A Long Strangle will cost $1,081.25, as each call and put contract is based on 5,000 bushels of Chicago wheat. This is the maximum amount you could lose if wheat price did not break out the upper ceiling or fall through the lower floor set by the strikes. At this writing on July 18th: a) ZWU2 futures is quoted at $7.81/bushel, down $2.73 or -26%. Our expectation of big price move is proven to be correct . b) Call options with $12.00 strike price is quoted at 10 cents, down 7 cents. Even though futures price declines, there is still time value in the OTC call options. c) Put options with $9.00 strike is quoted at 85.5 cents, up 1749%. Due to the nonlinear nature of options pricing, our put is hugely profitable as it is now $1.19 deep in-the-money. What can we do today? There are two options: 1) Sell both the call and put with offsetting trades. The call would realize a loss of $350, and the put has a profit of $4,043.75, making the combined total at $3,693.75. Taking the $1,081.25 premium we paid upfront as our cost base, gross profit will be $2,612.5 per contract, or +242% return in a five-week holding period. 2) Hold the positions . There are five more weeks left before the August 26th options expiration, and wheat price could make bigger move. For illustration purpose, let’s use today’s price as exercise price. The Call would expire worthless as it is out-of-the-money, and we lose the $850 initial investment. However, by exercising the put, we gain $1.19 (=9.00-7.81) per bushel, and $5,950 per contract. The combined gross profit will be $4,018.75, or +372% . Why does this trade work? The key lies with a properly set-up strategy. It’s time to revisit our Three-Factor Commodity Pricing Model: Commodities Futures Price = Intrinsic Value + Market Sentiment + Crisis Premium In February through May, the Russia-Ukraine conflict put a huge Crisis Premium on wheat price, driving it from $8 to $12-$13, before moving lower to around $10. Since June, surging inflation, aggressive rate hikes, and recession fears overtake supply concerns as the main market driver. As fighting in Ukraine drags on, the impact from crisis diminishes, and Bearish Market Sentiment takes over. Commodities markets from energy, metals to agricultural products all suffered a huge loss. Looking forward, I expect that Intrinsic Value, or traditional supply and demand factors, would come back as key market mover. The recently released World Agricultural Supply and Demand Estimates report (WASDE) from the U.S. Department of Agriculture set a bearish tone in the grain market, sending wheat price to fall further. For our CBOT Wheat Strangle options trade, I favor closing the positions now over holding it to expiration. Here is my reasoning: In a classic economic supply and demand chart, fundamental factors move market price along the supply line and demand line. Price movement tends to be moderate and within a narrow band. This is what the Wheat price chart shows before February 24th. On the contrary, crisis premium pushes either the supply line or the demand line to shift sideway, resulting in big price jumps. In the case of Wheat futures, investors are concerned that a loss of Russian wheat would reduce global supply by as much as 25%. Wheat price responded by a series of limit-up days and jumped 40% in two weeks. Note that daily price limit (up or down) on wheat futures is 70 cents per bushel. In the absence of conflict escalation in Ukraine, volatility in wheat price would likely stay muted going forward. Additionally, time value, which is part of the options premium, will decrease quickly as contract expiration nears. In the Black-Scholes Model, options price is positively correlated with volatility. Expected low volatility combined with diminishing time value will make it difficult for our Long Options to increase in value. This is my argument against holding on to the options. As the likelihood of global recession grows, food crisis will stay on as a major global issue in 2022 and 2023. Famine could hit weaker economies. Agricultural commodities will be a good risk management tool to hedge the rising food cost. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CBOT:ZW1!Short
by JimHuangChicago
21
Long Wheat (ZW) - COT Thrust Signal (Read for Explanation)CBOT:ZW1! A bit of a unique chart setup here - typically I trade based solely on the max positioning of the commercials (See below for an explanation of what that means). However, I will occasionally look for a buy when the Net positioning of commercials has accelerated recently (Indicated by black bars in the COT indicator at bottom of the chart). For this trade, use the daily chart for an entry using your favorite technical indicator (if it triggers!). Note: Crop Progress report on Monday Risk: There has been some recent heavy selling making this slightly counter trend Additional Note: Look how accurate the COT Index has been on calling highs and lows for Wheat (Green and Red highlighting on the bottom indicator). And no, I did not optimize the settings to get this to occur. Helping Materials to Understand What I'm Talking About (I have this on all my ideas now) COT Definitions: - COT: Commitments of Traders Reports - A weekly report published by the government (CFTC) that shows long and short positions of the below 3 groups (As well as much more data I don't look at). We look at the NET positions of these 3 groups and compare them to historical levels to signal trade opportunities 1- Commercials: Hedgers - We want to trade with them when they're at extreme levels (Think Tyson, Cargill, General Mills, etc) 2- Large Speculators: Hedge funds and large institutions - We want to fade them when they are at max positions (Think suits in NYC and commodity funds) 3- Small Speculators: People/institutions trading small lot sizes not big enough to report to CFTC - We want to fade their max positions as well since they represent the public (Think dude in his PJs trading and small trading firms) Indicators on Chart: - The first indicator shows the net positions of the 3 groups above plotted over time - The second indicator is an index of the relative buying/selling of commercials over a certain lookback period. Anything above 95 is looking for buy, look to sell when it hits 0. The black bars show when the index is moving rapidly and can also trigger a trade) - Note: Just because the Commercial's net position is negative doesn't mean it can't be relatively net long and signal a buy (same in the opposite scenario) Trade Setup - Both Must Happen: - When commercials are at max levels we are alerted to buy or sell (Depending on the criteria above) - On a daily chart , use technical indicators, candlestick patterns, news, etc to enter the trade (not shown here)
CBOT:ZW1!Long
by Rudeadam18
Head & Shoulders Top in December 2022 Wheat?Paul Wankmueller CMT of Blue Line Futures sees a Head and Shoulders Top in December 2022 CBOT Wheat. Feel free to reach out with any Technical Analysis Questions! Today Wheat broke through the neckline of a Head & Shoulders top with conviction, confirming the pattern. Using the distance between the neckline and the top of the head, the continuation can conclude at the previous resistance. Futures trading involves a substantial risk of loss and may not be suitable for all investors. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZWZ2022Short
by Paul_Wankmueller
Time for a Relief Rally?Wheat Fundamentals: Yesterday's crop progress report showed spring wheat ratings at 66% good/excellent, 7% better than estimates. Winter wheat is 54% harvested, a hair behind expectations. Yesterday's weekly export inspections came in at 111,830 metric tons, well below the range of estimates. Technicals: Our bias has been in bearish territory for a while now, but the market retreated back to some significant levels. Previous resistance in December and February from 800-815, was the breakout point on February 22nd. The full retracement in our eyes represents a short-term opportunity for relief in what is also a deeply oversold market. The chart still looks ugly as sin, but as with corn, there's a good risk/reward trade to the buyside at these levels, whether that be short covering or initiating a new position. We are moving our bias out of bearish territory to outright Neutral. Bias: Neutral Previous Session Bias: Neutral/Bearish Resistance: 898 ½-903****, 960-970*** Pivot: 839-849 Support: 800-815****, 739-749*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZWU2022
by OliverSloup_BlueLine
Weat Continues Lower Wheat Technicals (September): September wheat futures continued their descent yesterday, breaking and closing below the 200-day moving average for the first time in this contract's lifetime (September 2022 futures). This opens the door for a drop down near 800 which is where the market started accelerating to the upside during the Russian invasion of Ukraine. Market moves like this often overshoot breakout points, so a trade with the $7 handle in the near future wouldn’t be out of the question. Resistance above the 200-day moving average (901 ½) doesn’t come in until closer to 960. Bias: Neutral/Bearish Previous Session Bias: Neutral/Bearish Resistance: 960-970***, 1028 ¼-1037 ½**** Pivot: 898 ½-903 Support: 839-849**, 800*** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CBOT:ZWU2022
by OliverSloup_BlueLine