Quick Thursday Thoughts
Kevin Davitt | May 20, 2013 03:17AM ET
I would recommend NOT being short Silver. That market NEVER makes it easy, but it retested $22 and it just went Green on the day.
If I had to guess I would say the Dollar topped yesterday (perhaps for a while) and Bonds may have found short term support.
US 10 year yield flirted with 2% again and failed.
Crude oil options expire today.
July is trading around $95. The 85p/105c strangle with a month to go = 47 cents ($470). About a 24 blended vol. The 90p/100c strangle is about $1.50 with 95 cents in the put and 60 in the call.
I would consider being long the July 90/85 put 1X2 for .20. Pay $200 plus frictional costs. Position does well at expiration between 90 and 80. Risk above is $200+ commissions. Risk below 80 is unlimited.
If you're playing at home, hopefully you heeded the warning on Thursday/Friday to exit Coffee around 148. Traded down to 138 today. Getting close to interested on the LONG side again.
Also, if you're playing at home, hopefully you exited the Natural Gas at the 4.07 target. Inventories just came out and we're back to 3.95.
Philly Fed was horrible, just like most data with the exception of the Non Farm Payrolls and Housing Data (which is a big deal).
What is Lumber telling us? Maybe it's worth a shot at buying it in this neighborhood. I know very little about that market, but it looks overcooked to me. Every point = $110.00. So if you buy it at 320 and sell it at 340, you would be up $2,200 less frictional costs. If you got stopped out at 310, you would lose $1,100 plus costs.
Finally, Gasoline is RIGHT at high end of range. It had a monster reversal yesterday. Aggressive types could lean short, but if this thing breaks out your "non core" inflation numbers are headed higher.
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