Prepared by

Ira Epstein & Company

It appears that harvest pressure is upon us and on a seasonal basis, volatility appears to have subsided for this year. I believe the last potential market shocker is also out of the way, it's getting too late for an early frost. Consequently, option premiums are low and puts are inexpensive. That fence post to fence post crop that we've heard about all summer appears to have survived intact. Look to pick up December corn and January bean puts. Check with me for optimal prices/strikes on a given day.

I'm bullish. Cotton has held support going back a year and a half on the chart. It showed signs Friday of attempting to “light up” by rallying 100 points in the last hour of trading. Additionally, I believe it could be more susceptible than many crops to El Nino, which looks like the real culprit this cycle. This commodity lends itself to varied degrees of aggressiveness: I believe valid approaches include vertical spreads, covered futures and ratio backspreads, depending on your tolerance to risk/reward.

I'm extremely bullish this currency. Fundamentally, from what I'm reading the consensus seems to be that the Bundesbank will raise rates within the next six weeks. Technically, the chart appears to have bottomed. And seasonally, this is the time of year that the mark has historically been strongest. Want a clincher? Talk of intervention against future dollar strength. I have been initiating call ratio backspreads on behalf of clients for the past 10 days and they are off to an excellent start.

Want a short strangle for old time's sake: sell a CLZ 2150 call and an 1800 put. This market has been trading sideways for quite a while and I expect this to continue. Fills in the crude options have been excellent, which can't always be said of those in heating oil, unleaded and natural gas.

In summary, I believe options are an excellent tool to employ in your trading arsenal. They can slow down the entire game and can be used as primary positions themselves or in conjunction with faster-moving futures.

September 16, 1997 Tim Zurick

Ira Epstein & Company

223 West Jackson, 7th Floor, Chicago, Illinois

Spreads
Tiger On Spreads | Prudential Securities, Inc. | Consensus National Futures and Financial On Line Index

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