Wheat options by Thomas Barry (TQB): Wheat beak stalls late Tuesday. There were some concerns about this latest weakness in the wheat futures. Tuesday saw the market go right past the $3.47 mark in Mar. without the slightest pause for good measure on its was to the low $3.40's. The Mar. 340 strike again became the darling strike for those who are showing soreness there as Mar. expiration approaches. If you were looking for a good sale in the wheat options and you had no problems with existing inventories that was the one to sell. People are unsure for the most part. It's not that they are in panic mode; they're simply in shoulder-shrugging mode. The major buying presence that produced some of the more dramatic options action in months late last week has essentially stepped off stage, and now the question is whether or not they've left the building or just happen to be lurking in the wings and waiting for the sentiment to sour enough to extend these losses. But as the closing bell was sounding, there was some recovery in the wheat futures. Mar. made back above the key $3.47 level, injecting some hope for the bulls that this situation may not get too out of hand to the downside. Keep in mind that last week showed everyone how easy it was for size buyers to buzz right through that long-term resistance at $3.61 in the Mar., only to abruptly walk away and leave the market suddenly precariously vulnerable to a pullback without that buoyant force holding things up. You can bet that whoever was attracted to the wheat last week would like nothing more than to see the trade turn tide and develop a nasty taste in their mouths for this latest failure and come after the wheat from the sell side with the notion that the funds did what they wanted to do and are now on to other projects. That might be a mistake. Sure, it's unpredictable, and yes they do have a habit of coming in and then moving on. But judging by the way the KC futures market has consistently surprised those who thought the rally was sufficient, I wouldn't turn my back on the wheat. Like I mentioned in Monday's wire, the options action might cool off here for a week or so as Mar. expiration creates some tentative sentiment among those holding open positions in the 330 and 340 strikes. Tuesday's late rally was encouraging for everyone who is hoping this recent volume and volatility will last a bit longer. END
