I know that wheat has been cultivated for about 10,000 years, and for its longevity, I should give it more respect. For me, though, it just keeps the meat products from making my hands greasy. Hamburgers, tacos, pulled pork sandwiches. You get the idea. So, when wheat futures hit their lowest price in five years last month, it just meant that protein holders might be cheaper. But the Dec wheat futures, /ZWZ5, bounced off that low on strong demand and exports. And if those factors continue, it could keep /ZWZ5 moving higher. /ZWZ5’s OTM calls are trading over equidistant OTM puts, indicating that the market sees risk to the upside. That might be enough for a trader to consider a bullish strategy. /ZW’s IV has stayed strong even as the future rallied, and its 24% overall IV and 56% IV rank make its options good candidates for short premium trades. If you think /ZWZ5 might continue to rally over the next few weeks, the short put vertical that’s long the 510 put and short the 515 put in the October expiration with 37 DTE is a bullish strategy that collects a credit 1/3 the width of its strikes, has a 70% prob of expiring worthless, and that generates $.82 of positive daily theta.
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