Despite the drama of the US-China trade wars on which agriculture sits on the front lines, grains have been relatively flat over the past month. Even though the growing season is in the southern hemisphere, the US inventories and politics are dominating/ZC, ZS and /ZW. Of course, if you think about grains, you have to think about DE. DE’s had a nice run up (nothing runs like a Deere?) on strong sales and earnings are coming out on Feb 15, which is helping to prop up its IV to give it a 50% IV rank. That’s high enough to make credit spreads interesting. If you think that DE might get stuck in a wide range like the ag products it depends on, and are willing to trade through earnings, you might consider a neutral option strategy. The short iron condor that’s long the 140 put, short the 145 put, short the 170 call and long the 175 call in the March expiration with 50 DTE is a neutral strategy that collects a credit 1/3 the width of the strikes, has a 66% prob of making 50% of its max profit before expiry, and generates $1.94 of positive daily theta.
Opened 19/01/24 for $1.90 credit
Closed 19/02/15 for $.98 debit