Given the following reasons below, you should carefully consider whether or not this trade could be a good fit for you. Futures and options are not for everyone, and this is not a trade solicitation. We believe that we have outlined the risks of this strategy to the best of our ability.

March corn a year ago was within a couple pennies of the price that march corn presently is at.

By the end of Feb we had traded to $4.95.

We think history could repeat itself or maybe even be better.

Our corn demand is off the charts and we are not sold that our production is any place close to where the USDA presently has us at. On top of that we have a world carryout that is the tightest it has been since 2013.

With that in mind we like the following trade:

Buying $4.60 Feb corn calls, which are about 14 cents above the market. To pay for them we are selling a Dec $5.00 corn call.

The kicker is that we are buying 4 of the $4.60 to every one of the $5.00 that we sell.

If corn repeats last year’s performance and gets to $5.00, the options are worth 40 cents each or 1.60 per 1 lot of the ratio trade. If corn gets to $5.50 they are worth 3.60, and if it gets to $6.00 they are worth $5.60. We are not saying that we see $6.00 corn, we are just looking at examples.

A trade that helps pay for farms if the market decide to take off, or turns a breakeven year into a profitable one through trading strategies.

Why are we not just buying the calls? We like paying for them with a short $5.00 call in case the market doesn’t go up like we think it could.

If we get some sort of black swan or negative event that causes prices to crash down, the call that we sold to finance the long calls will be cheaper, and you are out very little money on the total strategy.

So this is a way to play for a rally similar to last year, while taking advantage of low implied volatility.

Right now we could buy 4 Feb $4.60 corn calls and sell 1 Dec 26 $5.00 call for a credit.

Another variation to this trade would be to buy longer dated options, giving us more time to move. We would look at 3 March $4.60 calls vs 1 Dec $5.00 call for a net cost of about 1 cent. Or we could even extend coverage out against the May contract.

Margin on this strategy is around $700/contract.

What are the risks to this trade? If we do nothing and the market doesn’t get a rally, then we’re looking at Feb calls that expire and we have to spend a little bit of money to buy back the short December call or be left with a short option margin requirement.

Below is the Average Daily Continuation Chart of corn. You can see that we opened the year in approximately the same place, and rallied to > $5.10 in mid-February. If the market can get above $4.57, which is our yearly open, we have a lot of room to see the upper $4.00’s and possibly trade into the $5 handle.

March Corn Seasonal pattern with the 5, 10, and 15 year trend

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. Communications on all mediums may be recorded. This is for information purposes only and should not be considered financial advice.

Ratio Corn trade on our radar

Pre-Report 11-12-25 trades