We had purchased a March Corn Call option at a 445 Strike Price (see our post: We are Long Corn After Breakout Above 439 As Of 12/12/13) which expires today, 2/21/14. Prices as of today are 453.5 (at the time of this post). Since our March Corn Call option is worth a little less than we paid (we paid $437.50 back on 12/12/13, and as of now it’s worth ~$425.00 if we sold it, since there is no more time value left on this option) we are instead going to exercise our March Corn Call option and place our Stop-Loss at 437.25 (just below the support level on the Daily Corn chart below).
If prices move up from the current level of ~453, we will gradually move up our Stop-Loss to lock in more profits. If prices move down below 437.50, we will have only lost our original investment in this option of $437.50 plus $400 (445 Strike Price minus 437.25 = 7.75 cents X $50/cent) if we get stopped out. That’s a total risk of $837.50 in a market already trending up with huge upside potential.