I sold 1 Jan Cotton Put for 2.15 (or $1075 less commissions). The strategy I'll be using is exactly the same as my lumber trade. Either I'll get assigned or keep all the premium I wrote.
I traded Cotton in 2006 and at that time I bought futures contract outright around 55. This time, since I'm holding Lumber, I got a bit more conservative and waited patiently. My plan is to sell another put at 30 and 2 more at 20. If Cotton somehow keeps dropping and gets to 20, I'll be holding 4 lots with the avg of 27.5. At that time, the drawdown will be $25000 (yikes). The lowest Cotton price I've seen is around $50 and I think $40 is a really solid level evn if I do get assigned.
The Jan Cotton options expire on Dec 19, so I'll keep you posted or you can click here.
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