Trade Description
Buy one November Soybean 660 call and on the same ticket, sell one November Soybean 640 put and buy one November Soybean 620 put for a combined spread credit of approx. 6 cents ($300).  Options expire on October 21st, 2005.  Margin is approximately $450, but can fluctuate based on time, volatility and price action. 

Explanation
A strong counter-seasonal retracement in beans places the market at a point of potential value.  Anticipating strong China demand and potential for issues from hurricane related problems allows for the potential for a strong bounce in the market.  This trade design allows for a defined risk quasi-futures play and has unlimited profit potential in addition to benefiting from a defined margin and high potential ROI on the trade.

Profit Scenarios
Max profit at expiration is unlimited.  Profit (assuming a $300 entry credit) is $50 per cent above 6.34 up to 6.40, whereas profit from 6.40 to 6.60 at expiration is $300.  Profit then increases $50 per cent above 6.60 to infinity at expiration.

Risk Scenarios
Max risk is $1,000 minus the credit received on entry - hence a $300 credit means max risk is $700 ($1,000-$300=$700).  Loss occurs at $50 per cent below 6.34 to 6.20, which is max loss at expiration (anything at or below 6.20).

Disclaimer
There is risk of loss in all commodities trading.  Commissions and fees vary per individual and therefore are not included in profit, cost and risk scenarios.  Please consult a licensed broker before you trade for the first time.  Losses can exceed your account size and/or margin requirements.  Commodities trading can be extremely risky and is not for everyone.  Some option strategies have unlimited risk.  Educate yourself on the risks and rewards of such investing prior to trading.  James Mound Trading Group, or anyone associated with JMTG or moundreport.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (clients or otherwise).  Past results are by no means indicative of potential future returns.

James Mound, owner of JMTG Brokerage LLC, MoundReport.com and author of the book 7 Secrets, writes the Weekend Commodities Review Newsletter. Receive your free weekly subscription to the Weekend Review by e-mail. Click here.