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Re: May Corn Observations #4/All


LIMIT UP EXCUSE for March 31, 2011
What really interests me is what happened with price and where it stopped/settled out tonight.

Here is a link to the TFC Article that I found interesting.

In short:
Corn went limit up 30 today after the USDA report, then near 2nd day limit up of 45 tonight.

[The basic excuse was an unexpected 15% decline in corn stocks over the winter, read article for rest of little stuff.]

Here is what I find very interesting. See 3rd. paragraph of article mentioning "synthetic options pricing" !!

Quoted from Article:
Corn futures climbed 4.5% to $6.93 1/4 a bushel at the Chicago Board of Trade,
the largest allowed one-day increase under exchange rules.

Market participants used corn options to price futures above the daily limit,
with traders saying the May contract synthetically traded around $7.32 a bushel
in the options pit. That indicates prices were more than double the daily limit
for futures. Synthetic prices are the implied price of futures based on options

GUESS WHERE THE PRICE IS NOW !! At the open at 7pm Eastern tonight the CK11 contract jumped right to 733 on the open and has essentially remained at 732 +- a buck all evening.

Note that the referenced article was published at 3.45pm eastern, long before tonight's open !!

I'm no options expert for sure. Someone could see what was happening or that article could not have been written. But it is clear, the exchange daily limit was circumvented !!

On Wed. I felt a pullback was in order but decided to wait for the USDA report dust to settle. Now I'm at square one. Will have to see what develops on the chart !!!

Would be interested in thoughts on this.
Thanks, Lee

Messages In This Thread

Re: May Corn Observations #4/All