We started the day session with a strong Bullish move up to the 8ema. As I mentioned in yesterday's post, the July Wheat Futures 660 Put Option hedge we bought yesterday for 15 1/8 would lose value quickly if price starts rising because of the size of the hedge and its proximity to expiration. So, given the strong upward move combined with a fast rate of change in the hedge, I sent the following Tweet at 10:03am ET:
"Seeing some strength in July Wheat and Corn so sold the hedge."
Sold it for 12 points, so the loss was (12 - 15 1/8) * $50/pt = -$156.25.
This decision seemed to be a good one as the futures price continued to rise. But it topped out at 11:51am ET at 672.75 which is both the 8ema on the Daily chart as well as the swing high on 2/24/21, which can serve as resistance. It was marked on our chart. See the then white horizontal line.
By the end of the trading day, price had retraced almost exactly to the open, thereby forming a Doji candle. We were at the middle of the Flag pattern channel, with mid-range Stochastics, and a Doji indecision candle. Where we go from here is a crap shoot.
So, in response I sent the following Tweet just before the close:
"Bought the Wheat hedge back."
This time we got the hedge for 13 points x $50/pt = $650.
By the way, July Corn closed with a Doji, just below the 8ema but above the Flag pattern Trend Line. Stronger position than July Wheat but still in need of protection.
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