OptionSellers.com

Michael: Hello everyone, this is Michael Gross of OptionSellers.com, here with your monthly guest expert interview. This month’s guest expert is Don Singletary, author of the Options Exposed Playbook. Don spent 25 years as a consultant for commercial commodity hedge plans, helping him to implement option strategies to lower cost and increase their efficiency. He has also spent much of that time as an individual options trader. He is going to bring a unique perspective on that to you today. Don, welcome to OptionSeller.com Guest Expert Series.

Don: Well, thank you very much, Michael. I’m glad to be here. It’s my pleasure.

Michael: Don, let’s start off by telling us a little bit about your background and how you got started in the trading industry.

Don: Well, there is a lot to talk about today about options and making money, so I’ll get to the buy out part pretty quickly here. I started in broadcasting at the age of 15 and I grew up in a small town that only had 2 radio stations. I worked for both of them- they used a different name at each one. While I was in high school, I became a licensed broadcast engineer, continued electronics in the Air Force, worked countermeasures during the Vietnam era, and worked for the Motion Picture Bureau at the Florida Department of Commerce and Economic Development. I had the pleasure for several years, a week every month, I spent in Hollywood, California. It’s a pretty remarkable “bubble-world” out there, and it still is. Patty and I were just starting a family in those years and that took a lot of travel, so I gave being a stockbroker a try. One of my specialties there was introducing customers to the covered call writings, sort of a specialty of mine. Now, back in those days, in the mid 1980’s, it was very much a bull market. I think a drunk monkey with a dartboard could’ve made money. As luck would have it, I got to be a broker during those few months. I got a good offer to teach at a technical college right before the big bust in October of ’87. I took a lot of my customers in cash before I left, not because I was smart or I knew a market crash was coming, I just needed to make a lot of money and they had become friends of mine and I didn’t want to leave them hanging. I kind of put them all in cash and gave them a proper goodbye. Now, when the market crashed 30 days after I left to take the college professor job, my clients thought I was a genius. That’s certainly not true- I was just lucky! So, the greatest work and financial undertaking I ever had was the last 20-25 years. I never saw it coming. I don’t think anybody grows up to be a consultant to private corporations for risk management. I never even knew such a thing existed. I spent thousands of dollars on commodity books and the best option modeling software that I could ever find, and I bought a few of the newest and most powerful computers in the early 90’s. I think I thought I was going to be a trader and make a lot of money, but fate stepped in. That was coming, but it’d be later. It was something I never even thought. I got a call from a commodity producer who’d seen some of my option modeling that I’d faxed to a buddy. That phone call resulted in the working in risk management for the next 25 years. I got to work with some amazingly smart and creative people at the top levels of some major corporations, and it was just my good luck. I really got an education that money can’t buy.

Michael: Well, we’re hoping you can share some of the pointers you picked up there with us today, Don. I know one of the reasons we wanted to have you on was that you kind of have a unique insight and you have insight into the commercial side of this business, but you’ve also been an individual investor, so you have insight into that side as well and can give maybe people a perspective from both sides of that coin. Before we get into that, Don, I want to talk just a minute about you book, Options Exposed Playbook. Just a grea(continued)

Good afternoon. This is James Cordier of OptionSellers.com with a market update for June 3rd. Later this year, we’re going to look back at the months of May and June. I think we’re going to see that we had quite a crescendo in option values as premiums have ballooned over the last 30 to 60 days, with much Fed talk trying to manipulate interest rates and manipulate the value of the dollar, and they’ve become very successful at this.

Over the last several weeks, Fed Reserve Janet Yellen has been talking about raising rates. Whether they do or whether they don’t, they’ve been very successful in increasing the value of the dollar. This hawkish talk has brought down several commodities; namely, precious metals, and we now have a hawkish stance priced into both gold and silver. The gold market rallied briskly earlier this year, up to 1,300, and we now lost 100,000 contracts in open interest as people piling in with dovish talk have now left the market. Gold recently tested the $1,200 level recently, over the last couple of days, and is trying to stabilize above that level. The silver market has come down nearly $1.50 on this hawkish talk, as well.

Should we have more dovish speech coming out of the Federal Reserve over the next month or two, we would have a fair value in gold and silver, quite a bit higher than where it is right now, but currently it’s fairly priced. A dovish conversation in June and July could cause the silver market to rally a dollar or two above the levels that it is right now. However, fair value is something that we’re always trying to consider, and supply and demand… we can’t get away from that.

Every time the Federal Reserve moves the market up or down, our precious metals certainly react to this. But at the end of the day, supply and demand rules the price. Gold and silver do have supply and demand factors. They don’t have currency factors constantly moving the market. At the end of the day, whether we have announced too much of gold or silver, the price goes down.

The other markets that we follow certainly are foods and energies. Those, quite often, are much more easily discernable as far as supply and demand goes. Some of the foods that we follow, coffee, for instance, has been doing extremely what we spoke of. The supplies right now, we think, are more than ample to go around. Both Vietnam and Brazil are producing a great deal of coffee, even though we had dry conditions in some of the Robusta areas in Brazil. We spoke of coffee for the last 6 months probably being depressed because of the high supplies worldwide. Lo and behold, prices are sitting near a 12-month low.

The sugar market right now is having some supply problems, and that price is now going up- it’s moving up towards 17 and 18 cents a pound. So often, we all get caught up with the daily ups and downs of the market. However, what we do is we want to trade supply and demand, and that is why we are able to sell options 6-12 months out. We avoid the noise and we simply want to trade supply and demand factors.

Also, what’s most interesting is that at the very beginning of the year we talked about orange juice, a seldomly traded commodity option by ourselves. However, we were talking about the supply of Florida orange juice being at a 50-year low. What has the price done? It has gone up. Today, we hit a new high for orange juice futures. Supply and demand is the way that the market is always going to react. The price is always priced fairly and that is how we sell options based accordingly.

Anyone wanting more information from OptionSellers.com can visit our website. Also, anyone who doesn’t yet have an account with us can call our office and speak to Rosemary and see about getting set up in a conversation with Michael Gross in order to set up a new account. I hope everyone has a good day, a good trading month, and we look forward to speaking to you again in two weeks. Thank you very much.

Bill: So what are these fires going to do to the price of oil as a factor? James Cordier, from OptionSellers.com, he thinks the wildfires there are giving oil a short-term string, and the headlines will be no match for the over-supply. In fact, you think we could see $35 again by the end of the year, don’t you?

James: Bill, we certainly do. We’ve certainly had a seasonal rally. Last time we spoke to you we were back in January and we were talking about a seasonal rally starting in February, rallying into March and April. We’ve had that. The fundamentals have not changed that much from last winter when we were sitting around $30. There’s a lot being made about the smaller production in the United States. Of course, we’re losing some barrels out of Canada right now. But as we get past driving season, we’re going to have, once again, a glut of oil. We’re losing places to fill storage tanks around the world. Believe it or not, we’re starting to import oil here again, and I think this fall we’re going to have a big supply problem on our hands, once again.

Kelly: Before we get to that, James, to your point about what’s happening in Canada, BP Canada has just declared a force majeure event following the Alberta Wildfires. That means a reduction in available Western Canadian select crude among other grades, and that’s according to Reuters, which sites two trading sources familiar with the matter. So, BP is saying delivery of oil would be affected during the month of May. So, focusing on the direct impact of this, James, what do you anticipate it would be?

James: You know, today crude oil is trading $2 under its previous high over the last week or so. We hit $47-$47.50 recently. We’re down $2 below that in the summer months. If, in fact, we thought this was going to be a long-term fundamental change, we would be trading up near those highs that we were last week. So, the fact that we’re down $2 from that level tells us that the seasonal rally, and the play that a lot of investors took part in back in winter, is just about running its course. In a hockey game here in Tampa, we’re probably in the 3rd period right now of this market rally.

Bill: You know, for me, I wonder why we’re not at $35 a barrel now. I get the whole concept of the seasonal rally and all that, but we’re in unusual times, if not unique times, right now with the glut of oil that we’ve seen with the tremendous overproduction that has gone on around the world. We still have tankers, I’m told, out in the ocean waiting to find some place to drop off their oil. You were even making the point that fundamentals maybe aren’t supporting this seasonal rally and we’ll have this glut down the road. There’s a dichotomy there. What’s going on here?

James: The market rally is practically every February through May, whether we have the largest supplies in history, like we do right now, or not. If, in fact, the fundamentals bode well for the market, it then rallies into June or July, it extends the seasonal rally. Bill, you nailed it. The supplies worldwide are enormous. The United States has supplies near 100-year highs. Iranian and Iraqi barrels are going to start coming on to the market September, October, November, and we’re going to have a glut of oil again. No one knows how low we’re going to be. We’d expect we’ll be in the low 30’s in the 4th quarter of this year. Seasonal rallies are really interesting how in fact they do take place. They did it again this year. We would be shorting oil over the next 30 days with both hands.

Kelly: Alright, James, thanks for joining us.

James: My Pleasure.

Good afternoon this is James Cordier of OptionSellers.com with a market update for May 20th, it’s so interesting to look back to the days where Alan Greenspan and Paul Volker were running the Federal Reserve. The stark contrast between what’s happening now and back then is just amazing. Of course this past week, again, the Federal Reserve decided to play with the markets by saying we may very well be raising interest rates this summer, you’ll just have to wait and see but we’re more likely to do that now than we were say a week ago.

It’s so interesting computerized of buying and selling kicks in selling the stock market, selling gold and silver, selling crude oil, and buying the US dollar commodities basically are moving in lock step with what the Federal Reserve is saying or in fact what they’re pretending to say. At the end of the day interest rates in the united states are going to be on a very slow climb. Possibly quarter percent this summer possibly not possibly one in the fourth quarter maybe after the election. With interest rates at negative levels all around the world is very difficult to see how the Federal Reserve is going to raise rates here in the United States, but what the Federal Reserve does here is they simply are throttling the market. When the US dollar gets too weak they talk caucus, when it gets too strong they talk dovish and basically that’s all it turns out to be. The one thing that does seem consistent is that the Federal Reserve will probably continue doing this, sending jitters through both the stock market and commodities and currencies around the world. This is probably going to be the most stable situation going on for the next six or seven months as we wrap up 2016.

The one thing also that this is doing is building up huge amounts of premium and commodity options both on the call and put aside. For those of you listening today that have read our book “The Complete Guide Option Selling” third edition, chapters 9 and 10 talks about selling credit spreads. This is our first choice in managing and deploying option premium to your accounts. This is something we’re going to start utilizing in the coming weeks and months and this is the slow steady return that we’ve been hoping for and this is what we’re always gearing towards both in our book as we wrote and going live in your account trading both metals energies and the foods. Going forward the next six or seven months this year, this is going to be the deployment we’re going to be using and I think it is going to be working out quite well because of the extreme large premiums that the jitters are causing both globally and here in the United States. Look forward to seeing those in your account and we expect a nice and slow steady profits and returns going forward that is all coming from DK. Every option you sell you want to have expire worthless and this should help drive to option expiration, certainly the desired effect of option selling.

For those of you who still do not have an account at OptionSellers.com can visit our website or contact Rosie at the 800 number listed. As always it’s a pleasure speaking with you and looking forward to doing so again in two weeks. Thank you.

800.346.1949

If you are a high net worth investor, preserving and growing your wealth is likely a high priority for you. You worked hard for your money. Now you feel it should be working hard for you. But chasing maximum return and yield is hard, isn’t it? Stocks are great, until they aren’t. Getting responsibly diversified is more difficult than ever. Hedge funds can work, but you’re never really sure what they’re doing with your money. Options can be a great alternative, but most make the mistake of buying them. Stock option sellers may think they’ve found an answer, but premiums can be small, and margin requirements huge. Most will simply give up and settle for what they get. The market will decide their fate – it goes up, they will feel good. If it goes down, they will feel bad. However, if you always felt there was a better way to invest and all you had to do was find it, you may finally be home. It’s called selling options. Not in stocks, but in a completely separate asset class – commodities. This investment strategy can provide you with some flat out advantages as an investor. You won’t hear about it from your broker or financial advisor. But it exists and it’s real. There is only a small segment of the investment community that knows how to deploy it in a portfolio. The tough part is finding somebody that knows how to do it – right. Having found this website, you’ve already done that. Whether you are seeking diversification from equities, an attractive rate of return or are simply tired of trying to pick market direction, here you will discover an approach that can potentially deliver all three. Option selling, of course, does involve its own set of risks as well. Here you can not only gain a wealth of option selling insights from real portfolio managers, you have the ability to work directly with two of the country’s top option selling experts – the authors of McGraw-Hills classic book on selling options – in managing your portfolio. Your first step Request our Complimentary e-Report for high net worth investors – The 5 Crucial Keys to building a high yielding, low stress, option Selling Portfolio. Serious investors make serious investments. Smart investors don’t only want the highest odds of success when putting money to work, they seek out the best expertise they can find to help them manage it. OptionSellers.com is recognized as the global authority on selling commodity options. Our flagship book, The Complete Guide to Option Selling, now in its third (McGraw Hill 2015) edition, was authored by OptionSellers.com’s James Cordier and Michael Gross. You may know them from regular media appearances on CNBC, Bloomberg Television, Fox Business, or their regularly published articles or market comments in The Wall Street Journal, Barrons, Forbes, and MarketWatch. Founder James Cordier has been interviewed on his strategy and the markets by the likes of Larry Kudlow, Neil Cavuto, Robert Lenzner of Forbes and Dr. Donald Moine of Morningstar Advisors.. As a client of OptionSellers.com, you have the ability to work directly with the authors in the managing of your option selling portfolio. Since 1999 OptionSellers.com has helped investors across the globe employ funds in an option selling approach. If you are a high net worth investor who qualifies for our program, perhaps we can help you too. To learn more, first get your complimentary e-report at the top of this page.

Michael: Hello, everyone. Welcome to the monthly Option Seller Radio Show. This is Michael Gross here with James Cordier, coming to you from Tampa, Florida- our main office. We’re going to talk a little bit about the markets, a little bit about trading this month. Quite a bit going on, including what could be the final game of the series between the Tampa Bay Lightning and the Pittsburgh Penguins. My colleague, James Cordier, happens to be a Tampa Bay Lightning fan, and, being from Pittsburgh originally, I’m a Pittsburgh Penguins fan. James, what do you think on the series possible finale tonight?

James: Well, it’s interesting, Michael, we’re using our backup goalie and he had little butterflies the first game or two. He wasn’t getting any support from the other players, and finally he is, and certainly a great series right now. We’re ahead 3-2. We being the Tampa Bay Lightning. For your sake, I hope it goes a little bit further. For our sake, hopefully we get to win tonight and we get to watch for a day or two before the Lightning hopefully take on the San Jose Sharks. We have a couple clients in the San Jose area and it would be fun to get a little friendly bet going there, too.

Michael: By the time our listeners here this, they’ll know the results. They can visualize our reactions, I suppose. What a lot going on in the markets this month. Volatilities are subject of the month as an options seller. Volatility is obviously a very good thing, and probably the best place to start this month. You’ve been talking a lot about volatility in some of your videos, and I know we’re talking about it in the newsletter this month. Maybe just kick off, we’ve seen a lot of pick-up in the last 6 months across many sectors in commodities in volatility. What are some of the macro-reasons or why are we seeing this rebound?

James: The rebound in volatility is coming from the uncertainty, especially from the FED. Earlier this year, as we described, they were going to have four rate hikes in 2016. That got backed off to maybe one. Now, the Federal Reserve, one governor is being walked out after the other in front of the microphone, talking about possibly three or four rate hikes again. This back and forth is really gyrating currencies around the world, and certainly the currency play is directly affecting gold prices, silver prices, and oil prices. Volatility right now is through the roof, and this is certainly low-hanging fruit for option sellers. I know not everything applies to option selling however, because there is a world outside of this, but the volatility right now this is certainly a by-product of what’s going on, and certainly that does help what we do immensely.

Michael: Yeah, and a good point to make as an option seller, a lot of people asking now “Are they going to raise rates? Are they not going to raise rates?” People positioning on one way or the other are really gambling on a decision, and, as an option seller, you don’t have to do that. In fact, it really ushers in some of the strategies we talk about in our book as far as credit spreading. I know it’s one of your favorite ways to sell options. Maybe talk a little bit about that, how volatility does favor credit spreads, what advantages come to an investor for using a credit spread in this type of environment.

James: Michael, this environment, as we are referring to, certainly has the large volatility, which is blowing out premiums on option prices. In times of low volatility, in order to get decent premium, you do have to sell naked calls or puts based on if you’re bullish or bearish. Being naked is certainly not our first choice. Certainly we sell naked options because we don’t have the premiums available that further out strikes. Right now, it’s available by being able to sell protection against your short position, slow and steady option decay is what we’re after. Now, this environment offers that luxury to do that.

Michael: Yeah, you not only(continued)

If you are a high net worth investor, preserving and growing your wealth is likely a high priority for you. You worked hard for your money. Now you feel it should be working hard for you. But chasing maximum return and yield is hard, isn’t it? Stocks are great, until they aren’t. Getting responsibly diversified is more difficult than ever. Hedge funds can work, but you’re never really sure what they’re doing with your money. Options can be a great alternative, but most make the mistake of buying them. Stock option sellers may think they’ve found an answer, but premiums can be small, and margin requirements huge. Most will simply give up and settle for what they get. The market will decide their fate – it goes up, they will feel good. If it goes down, they will feel bad. However, if you always felt there was a better way to invest and all you had to do was find it, you may finally be home. It’s called selling options. Not in stocks, but in a completely separate asset class – commodities. This investment strategy can provide you with some flat out advantages as an investor. You won’t hear about it from your broker or financial advisor. But it exists and it’s real. There is only a small segment of the investment community that knows how to deploy it in a portfolio. The tough part is finding somebody that knows how to do it – right. Having found this website, you’ve already done that. Whether you are seeking diversification from equities, an attractive rate of return or are simply tired of trying to pick market direction, here you will discover an approach that can potentially deliver all three. Option selling, of course, does involve its own set of risks as well. Here you can not only gain a wealth of option selling insights from real portfolio managers, you have the ability to work directly with two of the country’s top option selling experts – the authors of McGraw-Hills classic book on selling options – in managing your portfolio. Your first step Request our Complimentary e-Report for high net worth investors – The 5 Crucial Keys to building a high yielding, low stress, option Selling Portfolio. Serious investors make serious investments. Smart investors don’t only want the highest odds of success when putting money to work, they seek out the best expertise they can find to help them manage it. OptionSellers.com is recognized as the global authority on selling commodity options. Our flagship book, The Complete Guide to Option Selling, now in its third (McGraw Hill 2015) edition, was authored by OptionSellers.com’s James Cordier and Michael Gross. You may know them from regular media appearances on CNBC, Bloomberg Television, Fox Business, or their regularly published articles or market comments in The Wall Street Journal, Barrons, Forbes, and MarketWatch. Founder James Cordier has been interviewed on his strategy and the markets by the likes of Larry Kudlow, Neil Cavuto, Robert Lenzner of Forbes and Dr. Donald Moine of Morningstar Advisors.. As a client of OptionSellers.com, you have the ability to work directly with the authors in the managing of your option selling portfolio. Since 1999 OptionSellers.com has helped investors across the globe employ funds in an option selling approach. If you are a high net worth investor who qualifies for our program, perhaps we can help you too. To learn more, first get your complimentary e-report at the top of this page.

If you are a high net worth investor, preserving and growing your wealth is likely a high priority for you. You worked hard for your money. Now you feel it should be working hard for you. But chasing maximum return and yield is hard, isn’t it? Stocks are great, until they aren’t. Getting responsibly diversified is more difficult than ever. Hedge funds can work, but you’re never really sure what they’re doing with your money. Options can be a great alternative, but most make the mistake of buying them. Stock option sellers may think they’ve found an answer, but premiums can be small, and margin requirements huge. Most will simply give up and settle for what they get. The market will decide their fate – it goes up, they will feel good. If it goes down, they will feel bad. However, if you always felt there was a better way to invest and all you had to do was find it, you may finally be home. It’s called selling options. Not in stocks, but in a completely separate asset class – commodities. This investment strategy can provide you with some flat out advantages as an investor. You won’t hear about it from your broker or financial advisor. But it exists and it’s real. There is only a small segment of the investment community that knows how to deploy it in a portfolio. The tough part is finding somebody that knows how to do it – right. Having found this website, you’ve already done that. Whether you are seeking diversification from equities, an attractive rate of return or are simply tired of trying to pick market direction, here you will discover an approach that can potentially deliver all three. Option selling, of course, does involve its own set of risks as well. Here you can not only gain a wealth of option selling insights from real portfolio managers, you have the ability to work directly with two of the country’s top option selling experts – the authors of McGraw-Hills classic book on selling options – in managing your portfolio. Your first step Request our Complimentary e-Report for high net worth investors – The 5 Crucial Keys to building a high yielding, low stress, option Selling Portfolio. Serious investors make serious investments. Smart investors don’t only want the highest odds of success when putting money to work, they seek out the best expertise they can find to help them manage it. OptionSellers.com is recognized as the global authority on selling commodity options. Our flagship book, The Complete Guide to Option Selling, now in its third (McGraw Hill 2015) edition, was authored by OptionSellers.com’s James Cordier and Michael Gross. You may know them from regular media appearances on CNBC, Bloomberg Television, Fox Business, or their regularly published articles or market comments in The Wall Street Journal, Barrons, Forbes, and MarketWatch. Founder James Cordier has been interviewed on his strategy and the markets by the likes of Larry Kudlow, Neil Cavuto, Robert Lenzner of Forbes and Dr. Donald Moine of Morningstar Advisors.. As a client of OptionSellers.com, you have the ability to work directly with the authors in the managing of your option selling portfolio. Since 1999 OptionSellers.com has helped investors across the globe employ funds in an option selling approach. If you are a high net worth investor who qualifies for our program, perhaps we can help you too. To learn more, first get your complimentary e-report at the top of this page.

If you are a high net worth investor, preserving and growing your wealth is likely a high priority for you. You worked hard for your money. Now you feel it should be working hard for you. But chasing maximum return and yield is hard, isn’t it? Stocks are great, until they aren’t. Getting responsibly diversified is more difficult than ever. Hedge funds can work, but you’re never really sure what they’re doing with your money. Options can be a great alternative, but most make the mistake of buying them. Stock option sellers may think they’ve found an answer, but premiums can be small, and margin requirements huge. Most will simply give up and settle for what they get. The market will decide their fate – it goes up, they will feel good. If it goes down, they will feel bad. However, if you always felt there was a better way to invest and all you had to do was find it, you may finally be home. It’s called selling options. Not in stocks, but in a completely separate asset class – commodities. This investment strategy can provide you with some flat out advantages as an investor. You won’t hear about it from your broker or financial advisor. But it exists and it’s real. There is only a small segment of the investment community that knows how to deploy it in a portfolio. The tough part is finding somebody that knows how to do it – right. Having found this website, you’ve already done that. Whether you are seeking diversification from equities, an attractive rate of return or are simply tired of trying to pick market direction, here you will discover an approach that can potentially deliver all three. Option selling, of course, does involve its own set of risks as well. Here you can not only gain a wealth of option selling insights from real portfolio managers, you have the ability to work directly with two of the country’s top option selling experts – the authors of McGraw-Hills classic book on selling options – in managing your portfolio. Your first step Request our Complimentary e-Report for high net worth investors – The 5 Crucial Keys to building a high yielding, low stress, option Selling Portfolio. Serious investors make serious investments. Smart investors don’t only want the highest odds of success when putting money to work, they seek out the best expertise they can find to help them manage it. OptionSellers.com is recognized as the global authority on selling commodity options. Our flagship book, The Complete Guide to Option Selling, now in its third (McGraw Hill 2015) edition, was authored by OptionSellers.com’s James Cordier and Michael Gross. You may know them from regular media appearances on CNBC, Bloomberg Television, Fox Business, or their regularly published articles or market comments in The Wall Street Journal, Barrons, Forbes, and MarketWatch. Founder James Cordier has been interviewed on his strategy and the markets by the likes of Larry Kudlow, Neil Cavuto, Robert Lenzner of Forbes and Dr. Donald Moine of Morningstar Advisors.. As a client of OptionSellers.com, you have the ability to work directly with the authors in the managing of your option selling portfolio. Since 1999 OptionSellers.com has helped investors across the globe employ funds in an option selling approach. If you are a high net worth investor who qualifies for our program, perhaps we can help you too. To learn more, first get your complimentary e-report at the top of this page.

Good afternoon. This is James Cordier of OptionSellers.com with a market update for May 1st. The commodity bear market of 2015 has certainly ended here in the first and second quarter of 2016. Quite often, as the dollar weakens, a lot of investors do go into commodities. They usually start with precious metals and work their way down. I think gold was the first market to rally this year, and now we have corn, soybeans, cocoa, sugar, and crude oil all following along very nicely.

The fundamentals in commodities right now have improved slightly, and the thinking there is that the Chinese economy has stopped falling and is about to get slightly better. How many commodities do they need, do they need steel, do they need iron ore, do they need copper? Probably not; however, they did let a lot of their surplus of supplies dwindle, and now they’re probably restocking and that’s probably a big push to the upside right now in commodities.

The other driving force to higher commodity prices is the weaker U.S. Dollar, of course. So many times we heard that the Federal Reserve was going to be raising interest rates in 2016. We began the year they were going to raise four times, then it was three times. Likely now, with an election season in full swing, the Federal Reserve might be raising rates once and that would be later this year. This, of course, has put downward pressure on the U.S. Dollar, and, of course, that is the other catalyst for commodities heading higher.

The supplies of the different commodities that we’re following right now, like crude oil, at all time record highs here in the United States. Soybeans at extremely high levels going into a planting season here in the United States. These have all caught fire recently. Basically, commodity hedge funds push the market in the direction most easily traveled, and with a weaker U.S. Dollar that price has been to the upside. We think that fundamental factors in commodities, like silver, crude oil, and soybeans, will wind up weighing these markets down later this year. We recently took short positions in soybeans. We recently took short positions in corn and crude oil.

We’ve been strangled in gold and silver recently. The silver market rallied sharply here approximately $2, from $15 up to $17 an ounce. We wound up rolling the calls side of our strangles up several dollars in many cases, and now, behold, we’re looking at strangles far out-of-the-money. So often, commodities are usually 20-30% out-of-the-money as far as selling options, premium, both calls and puts, and right now, going into May, we’re able to sell silver calls double the price of the current level. We think that this is going to be certainly low-hanging fruit for 2016.

Also, on the put side, we’re looking at put premium that is very attractive, which is 30-35% below the market. In many cases, we’re looking at silver strangles that are $25 wide and a commodity that is trading at $17. Opportunities like this don’t come along very often, but they’re with us right now and this is something that we’re certainly going to take advantage of. The coffee market we’ve been short practically all of 2015-2016, and we think that is going to continue to be a very good short. That commodity is in great abundance like many of the other commodities will be later this year, and we think that prices will reflect those larger supplies.

We think that 2016 right now is the beginning of the end of the bear market in commodities; however, we also see a lot of sideways action going into the third and fourth quarter, especially for crude oil, which has now rallied north of $45. We recently started selling crude oil calls for the winter time frame. That is usually the weakest moment for crude oil over the last several years. We’re looking at calls between $75 and $80 a barrel, levels that we certainly don’t think crude oil will get to, and we think those are going to be very good sales, as well.

As always(continued)