Trade Summary: March 28, 2016

| March 28, 2016

March 28, 2016

 

Trade Rationale

The financial markets have definitely quieted down over the past few weeks, which isn’t a bad thing considering how volatile the first month and a half of the year was.  It’s been more of a stock picker’s market lately, and good themes can make all the difference in your trading success.

This week, we’re going to look at the commodities markets, which have come back to life to some extent after several months of doing nothing.  More specifically, we’re going to exclude oil and take a look at a few other commodities which could pick up steam over the next couple months.

Our long positions are going to be established in agriculture, natural gas, and copper.

The first company we’ll buy calls in is Archer-Daniels Midland (ADM).  ADM is a massive farm products company specializing mostly in grain-related processing and storage.  The company is really cheap right now and would benefit from a turnaround in the major grain complexes.

Next, we’ll buy calls in Cheniere Energy (LNG).  The liquefied natural gas producer has made plenty of headlines recently and has mostly struggled.  Natural gas prices have gotten hit hard this year, and it certainly hasn’t helped the company.  However, LNG is the first company to export LNG overseas and it has several long-term contracts in place.  Basically, it’s hard to see anything but a brighter future for this business.

Finally, we’re going to buy calls on iPath Bloomberg Copper ETN (JJC).  We haven’t used an exchange-traded product (like an ETF/ETN) in quite a while, but it’s one of the most straightforward ways to trade a commodity.  JJC is the biggest copper-based ETN out there and should see a decent increase when copper prices rebound.

 

Trade Details

#1) Buy Archer-Daniels Midland (ADM) June 17th 37 Calls up to $1.80

For this trade, we’re looking for ADM to climb.  Our first profit point for conservative traders is at $40.  For aggressive traders, you can hold up to $42.50.  For risk control, the conservative exit level is $32.50.  $30 is the final exit level for aggressive traders.

Archer-Daniels Midland

#2) Buy Cheniere Energy (LNG) June 17th 35 Calls up to $2.75

With this trade, we’re also looking for a move higher.  Our first exit point for conservative traders is at $38.  For aggressive traders, you can hold to $42.  For risk control, the conservative exit level is $29.  And, $26 is the final exit level for aggressive traders.

Cheniere Energy

#3) Buy iPath Bloomberg Copper ETN (JJC) June 17th 26 Calls up to $1.30

Finally, we’re looking for a move higher in JJC.  Our first profit-taking exit point for conservative traders is at $28.  For aggressive traders, you can hold to $30.  For risk control, the conservative exit level is $24.  $22 is the final exit point for aggressive traders.

iPath Bloomberg Copper ETN

 

Category: AOA Trade Summary

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