Grain Spreads: Trading Gameplan
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Natural Gas June 2027 options
Sell the 6.00/5.00 put spreads for a $9700 collection. The max loss on the spread is 10K. Since we are collecting $9700 upon entry, our risk is $300 per, plus commissions and fees.
Suggested entry is 10 spreads. We collect 97K less trade costs.
I project that if Nat gas futures can rally from just around 3.00 to 4.50. In my opinion our projected return on this trade would be 10/12 to 1.
We are looking for buy back the spreads at 6K per, for a gain of $3700 per or on 10 spreads 37K.
We see demand remaining robust while domestic usage increases (data centers, pipeline buildouts, data mining) in our opinion. Supply vs demand could possible
Margin per spread -$193.00
May 2027 Soymeal.
Sell the 4.00/3.50 put spread for 46 points or a $4600 collection per spread plus commissions and fees. Max loss here is 4K, but we are collecting 4600 upon entry, less trade costs and fees.
Suggested entry is 10 spreads. We collect 46K less trade costs.
Deferred meal rallies from 310 to 350, we look to buy back the spreads at 25 points or $2100 per spread gain, x10 spreads =21K less commissions and fees.
We think that the oil share trade will recede where bean oil gives back versus meal. There is bias for this entering into winter months.
But we can’t rule out a weather rally for beans in July and August either. Good low risk and high reward that is in play until late April of 2027.
I’m putting 7k worth of risk plus all commissions and fees to collect approximately 58K less commissions and fees if our objectives are filled at the aforementioned exit prices. The risk in my view is worth the reward.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
312 957 8103
888 391 7894 toll free
312 256 0109 fax
Walsh Trading
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Chicago, Il 60606
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