Selling (Going Short) Corn Futures to Profit from a Fall in Corn Prices

If you are bearish on corn, you can profit from a fall in corn price by taking up a short position in the corn futures market. You can do so by selling (shorting) one or more corn futures contracts at a futures exchange.

Example: Short Corn Futures Trade

You decide to go short one near-month Euronext Corn Futures contract at the price of EUR 129.25/ton. Since each Corn futures contract represents 50 tonnes of corn, the value of the contract is EUR 6,463. To enter the short futures position, you have to put up an initial margin of EUR 700.00.

A week later, the price of corn falls and correspondingly, the price of Euronext Corn futures drops to EUR 116.33 per tonne. Each contract is now worth only EUR 5,816. So by closing out your futures position now, you can exit your short position in Corn Futures with a profit of EUR 646.25.

Short Corn Futures Strategy: Sell HIGH, Buy LOW
SELL 50 tonnes of corn at EUR 129.25/tonEUR 6,463
BUY 50 tonnes of corn at EUR 116.33/tonEUR 5,816
ProfitEUR 646.25
Investment (Initial Margin)EUR 700.00
Return on Investment92%

Margin Requirements & Leverage

In the examples shown above, although corn prices have moved by only 10%, the ROI generated is 0%. This leverage is made possible by the relatively low margin (approximately 11%) required to control a large amount of corn represented by each contract.

Leverage is a double edged weapon. The above examples only depict positive scenarios whereby the market is favorable towards you. If the market turn against you, you will be required to top up your account to meet the margin requirements in order for your futures position to remain open.

Learn More About Corn Futures & Options Trading

Ready to Start Trading Futures?

Trade futures now at OptionsHouse.com with special low introductory contract rates!

To buy or sell futures, you need a broker that can handle futures trades.

OptionsHouse is a full fledged Futures Commission Merchant that provides a streamlined access to the futures markets at extremely reasonable contract rates.

Click here to open a futures trading account at OptionsHouse.com now!



Follow Us on Facebook to Get Daily Strategies & Tips!

Corn Options & Futures

Futures Basics

Grains Futures

Options Strategy Finder

Outlook on Underlying:


Profit Potential:


Loss Potential:


Credit/Debit:


No. Legs:


Join the Discussions @ The Options Forum

Beginners Questions

Advanced Strategy Talks

RSS Feed Widget

Trading Ideas & Opportunities




Home | About Us | Terms of Use | Disclaimer | Privacy Policy | Sitemap

Copyright 2016. TheOptionsGuide.com - All Rights Reserved.