Prepared by

Ira Epstein & Company

Allow me to point out, first of all, the stunning accuracy of my lead recommendation of last week: the rally in orange juice ( hey, everybody's right sometimes). If you check this report regularly, you've probably noticed that I don't frequently recommend “directional” plays–especially short-term moves. But I'd like to reiterate the rationale for the trade: the market seemed extremely oversold and a bearish crop report was expected. In my experience, a rally is “almost” inevitable under such circumstances. Nothing to do with how the chart looked or what the report would actually say about the OJ supply–it was a purely a short-term play. Address letters of congratulations in care of Ira Epstein & Company.

Ah, but what about the other recommendations of last week? They were longer term, and I stand by them, for now: short the crude and coffee (that one's off to a terrible start) and increasing volatility in the sugar.

Back to the future: the global economic slowdown is on, which probably means steady to lower interest rates here in the USA. Which means that I believe the slow upward trend in bonds and notes should continue. Ideal conditions for bullishly biased short strangles. It's not too early to look at the June options here.

And why is silver over a dollar higher than it was two months ago, while gold languishes at $285 per ounce? I have no idea, but the run-up and resulting volatility has made silver options worth selling again, in my opinion.

Which commodities are lagging in the deflationary trend? I believe cocoa and the grains are being artificially supported by El Nino fears. Inexpensive, long-term puts are available on these commodities which, I believe, represent good potential.

December 15, 1997Tim Zurick

Ira Epstein & Company

223 West Jackson, 7th Floor, Chicago, Illinois

Options

Tiger On Spreads
Spreads Trading
Consensus National Futures and Financial On Line Index

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