caught short wheat

Quote from nightguil:

Hi to everyone, I have a question regarding the march wheat contract...i am short (like a fool) and was wondering how a person can get out if the futures were locked limit up all the way through march experation? if they opened up the limit everyday then expired how could you ever cover your short position? And if the march contract options expire tomorrow, how could you hedge it? Thanks for anyones help...
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If there is a chance (tickie) you could also try to hedge it with a long position at a different exchange or go long the mini contract. eg short ZW CBT long KCW etc

Not wanting to rub salt into the wounds, im just curious about why you went short such a strong bull market, wheat is the strongest out of the entire grain complex?
 
I just put the position on yesterday at the close, I was not available to trade tonight the first 20 min...Why would the position be imaginary, that is silly that someone would make up a story like this...I have only been locked in tonight and will be locked in through the crop report... As to why I put the position on in the first place, I have had great sucess in the past trading commodities when they have reversals, wheat was lock limit up yesterday and then sold off hard and went almost flat at one point. I bet the wrong way, i usually only do what i did, on a total "outside revesal day"... You live and you learn, next time I will use options in an extremley volotile market...
 
If you call down to a broker on the floor, there will be people making a market in the options pit. Just ask for the synthetic market in march. It will be a 5 to 10 cent bid-ask, but it will be there if the value is significantly higher than limit up.

They use deep itm calls with unopened strikes to get around the limits. If you want to buy W @ $11, you'll buy something like a $3 call with $8 of premium. Then immediatly exercise the call and you own W at $11. Though your statement will look very messy.

I don't know whether or not you're broker will give you a hassle about having to have all the cash for the premium in your account (in my example 800 ticks*$50/tick*5 contracts=$200,000). Not sure how retail brokers handle that.
 
Quote from nightguil:

Hi to everyone, I have a question regarding the march wheat contract...i am short (like a fool) and was wondering how a person can get out if the futures were locked limit up all the way through march experation? if they opened up the limit everyday then expired how could you ever cover your short position? And if the march contract options expire tomorrow, how could you hedge it? Thanks for anyones help...
More...

just make sure you have an buy order in.there is a good chance through the day that you'll get covered. it's friday,who knows what can happen
 
Quote from Shagi:

If there is a chance (tickie) you could also try to hedge it with a long position at a different exchange or go long the mini contract. eg short ZW CBT long KCW etc

Not wanting to rub salt into the wounds, im just curious about why you went short such a strong bull market, wheat is the strongest out of the entire grain complex?
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KC and Minni wheat are much stronger than chicago. ZW is the weakest wheat product right now. If you look at minni it's practically been limit up for a month. I think it's sythetically trading around $17. There's little chance of buying another wheat product without ZW coming off first.

You need to use options to sell synthetic contracts. It's either that or roll the dice and wait.
 
Quote from SDticks:

KC and Minni wheat are much stronger than chicago. ZW is the weakest wheat product right now. If you look at minni it's practically been limit up for a month. I think it's sythetically trading over $16. There's little chance of buying another wheat product without ZW coming off first.

You need to use options to sell synthetic contracts. It's either that or roll the dice and wait.
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Last update I had, Minn was $20 bid at $20.50.

I'm not kidding.
 
Quote from jsl50a:

Last update I had, Minn was $20 bid at $20.50.

I'm not kidding.
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Yeah my info is a day or so old. Wow! $20. How much further can this realistically go? I'm starting to get worried. No I'm not short, but yes I will need to buy beer in the future.
 
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