• Market:  July Soybeans (SN6)
• Tick value: 1 cent = $50.00
• Option Expiration: 06/23/06   
• Trade Description: Bull call Spread
• Max Risk: $500
• Max Profit:  $1500
• Risk Reward ratio 3:1

Buy one July 2006 Soybean 620 call, and sell one July 2006 Soybean 660 call, for a combined cost and risk of 10 cents ($500) or less to open a position.

Technical / Fundamental Explanation
Soybeans have begun to rally over the past few weeks which is quite in line with the seasonal trend for this time of year. While most other commodities are enjoying a rally on the back of the falling Dollar, grains (and soft's) have yet to really breakout and run. The continued slide in the the Dollar is all but baked into the cake, as they say, and we should see most, if not all, other commodities that have not yet reacted to this begin to do so over the course of the summer. Those who still want to say inflation is not real need only to look at the CRB index to realize that is not even a coherent let alone real argument anymore. Inflation is here and it is just getting started so strap yourself in and be prepared to pay more for just about everything. I hate to be the bearer of bad news but at least as traders we can identify this and profit from it rather than be at the mercy of it like so many others.

Profit Goal
At expiration, assuming a 10 cent fill, the break even point is 630. Each cent above 630 is $50 profit until we reach 660 at which point we have reached max profit of $1500. Max profit assuming a 10 cent fill is 30 cents ($1500) giving this trade a 3:1 risk reward ratio. Max profit occurs at expiration with Soybeans trading anywhere above 660

Risk Analysis
Max risk assuming a 10 cent fill is ($500). This occurs at expiration with soybeans trading below 620.

Matt Odom is the Managing Partner and Energy Analyst and Derek Frey is Head Trader at Odom & Frey Futures & Options.

Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.