Sustainability
Gradable Financial Services February Newsletter
Corn prices plummeted following the January WASDE report's announcement of record U.S. production, but CZ6 has since trended higher to reach pre-report levels.
Corn prices plummeted following the January WASDE report's announcement of record U.S. production, but CZ6 has since trended higher to reach pre-report levels.
CZ’26 Amplifier w At-expiry Double: $5 New Crop pricing
Price bushels at $5 every day CZ26 settles above $4.50, no KO
Corn prices fell off a cliff after the January WASDE shocked the market with record U.S. corn production. Since the initial reaction, however, CZ6 has trended higher, reaching pre-report levels late last week. Near term volatility levels have fallen and remain low, making it, in our view, a good value to own short-term vanilla options selectively. New crop term options, however, with IV ranging from 17-20% still have enough premium to justify selling. To that end, we like at-expiry style double-ups right now (we usually prefer daily doubles). Our preferred structure for the rest of February is the $5 amplifier, which can likely be booked if CZ6 hits $4.66. That would allow growers to sell $5 corn with NO KO, as long as we stay above $4.50. With technical support in the $4.40s, that feels like a good bet.
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