October 2012 Sugar

 

 

As of May 4, 2012, according to Elliott Wave projections, October 2012 Sugar was entering into a Wave 3 of a 5 wave move to the downside. On a close below the October 2012 contract low of 21.11, on May 4, 2012, I bought one October 2012 19 put option for 47 points or $526.40. The October 2012 options had an expiration of September 17, 2012, which was 136 days as of May 4, 2012. On June 19, 2012 I sold the October 2012 Sugar 19 put for 50 points for a profit of $33.60 before commissions.

The market moved down nicely after I entered the trade. October Sugar moved down to support at the 19 cent level and at that point my option had a profit of $548.80. My problem with this trade is that I did not have a specific target for taking profits. I was hoping that the market would fall further and that my option would go into the money. However, prices bounced back to the upside after hitting support at the 19 cent level and then the market began a lengthy correction. Soon most of my profit was gone. In retrospect, I would have been better off taking profits when the market hit support at 19 cents.