July Corn High Risk Trade

Above is yesterday's chart, the same as what is on yesterday's post. I saved it at exactly 2:33pm ET yesterday. The grains market closes at 2:20pm ET. When the market re-opened at 8pm ET last night,the daily candle from yesterday had changed. There must have been some late trades not yet in the candle or bad data in the candle that was corrected.

You can see on today's chart how the candle changed:

Notice how the bottom of yesterday's candle is mush closer to the 8ema. Even if I didn't exit yesterday, I would have last night or this morning as today's candle started descending. Why then do I point out yesterday's altered close? To help explain why I did what I did today.

Today, near the close, I took a look at the 10 minute chart to see if there were any Bullish or Bearish indications. Here's what I saw:

There's clearly a triangle that's been forming since about 8am ET. You can see it broke out to the upside, came back and retested the downward trend line, and continued upward. This is a bullish indication. It's also starting to form a bit of a cup formation. If price continues and completes the cup and then breaks higher, that would be a bullish signal.

We closed over the 3ema, 8ema, 20sma, 34ema,  and the 50sma on the 10 minute chart. That's bullish, but we closed under the 8ema on the Daily chart, which is not bullish.

We should not enter a long position until we close over the 8ema on the Daily, and then get confirmation on the next candle. But we've been looking for Corn to bottom on the Daily chart for a while now, and this might be an opportunity to get in a little early thanks to the 10 minute chart.

So, recognizing we're breaking a more conservative rule, designed to maximize our probability of a winning trade, I decided to take a high risk, albeit fixed and reasonably sized, bullish trade. To limit our risk to a fixed amount I bought an option.

I got the July (with June expiration) 3.35 Call option for 4 1/4 with a 27% Delta. So max risk is 4 1/4 * $50/pt = $212.50.

Trying to catch the bottom of the July Corn chart has been problematic but if we catch it early enough and it hits our target, it'll be well worth it.