A strategy idea for options trading investors.

Overview: Corn Products International

Corn Products International (NYSE: CPO) refines corn and produces sweeteners and starches. The company has customers in a wide range of industries, including food, soft drinks, brewing, pharmaceutical, corrugating, paper, and textiles. Corn Products has company-owned operations, joint ventures, alliances, and technical licenses in countries around the world.

Again, we are in challenging market times. We have to be careful with the stocks and strategies we choose. CPO is in the food business. We like this sector because, “it is what people need, not what they want” and they will spend money on it. The unusual weather patterns have started to effect crop productions globally. CPO is also looking at expansion in Brazil and it has good earnings from foreign markets and customers. We think CPO has some room to run to up and is a solid stock to own.

With this trade we know our capital outlay and maximum loss. Do not enter into open-ended trades unless you can take the pain that comes with them. Right now, I am not interested in any more pain.

Option Strategy: CPO Bull Call Spread (Vertical Spread)

STOCK/INDEX:         Corn Products International (NYSE: CPO)

STOCK PRICE:         $55.91

BUY/STRIKE/MONTH/PRICE:         1 Jul 2011 55 Call @ $1.70

SELL/STRIKE/MONTH/PRICE:       1 Jul 2011 60 Call @ $0.30

NET COST:                                        $1.70 – $0.30 = $1.40 (Jul 55 – Jul 60)

BREAKEVEN:                                    55 (Strike) + $1.40 (Total Premium Paid) = $56.40

MAX PROFIT:                                    Difference in the strikes or $5

MAX LOSS:                                       Limited — cost of 55 call–cost of 60 call = $1.40

Trade Commentary:

This is a bullish call spread. The strategy reduces upfront cost in order to benefit in a rise in stock price. Profit potential is limited. Potential loss is what you paid for the spread.

** Always remember, one option contract is equal to 100 shares of stock

Stutland Equities is a premier futures and options trading company on the Chicago Board Options Exchange. Founded in 2005 and headquartered in Chicago, Stutland Equities specializes in volatility arbitrage across multiple asset classes.