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Terranova's Hurricane Trades

Hurricane Bill might have been a lot of tempest in a pot of tea but don’t write-off the hurricane trade just yet!

There is a 70 percent chance we’ll see 7 to 11 named storms, of which up to 6 could become hurricanes. And according to the National Oceanic and Atmospheric Association (NOAA). one to two of those squalls could become major hurricanes (category 3, 4 or 5).

But how do those categories translate into cash? Joe Terranova explains all you need to know. Following is his report from Tuesday August 25th:

Let's say a hurricane is headed towards the Galvenston area. 18 of Texas' refineries are near the coast, representing 23% of all U.S. refining capacity. If a storm tracks toward this part of the nation forcing rigs to close, oil and gas prices are likely to soar.

Or, if the hurricane moves inland significant rain could drown out the late season of corn & soybean sending their prices skyrocketing.

And if the strike is east of Louisiana it could dramatically effect sugar and cotton, two commodities that are already severely supply challenged.

So before you tune out Al Roker and the national forecast, remember, every inch of rain has the potential to make you some fast money.

What’s the trade?

Terranova suggests trading the refiners that benefit from the price spike but can also keep production rolling after the storm. “I like Sunoco and HolyCorp because both have rigs away from the Gulf,” he says.

And don’t play hurricanes by getting long nat gas. “There’s too much storage and one hurricane won’t change that,” Terranova says.




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Trader disclosure: On Aug. 25th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Terranova Owns (AMZN), (MSFT); Terranova Owns (CCL) Puts; Terranova Is Short (SHLD), (EES); Adami Owns (AGU), (C), (GS), (INTC), (BTU), (MSFT), (NUE); Cortes Owns (SPX), (GS); Cortes Is Short Nasdaq 100; Najarian Owns (BAC); Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian Owns (C) Calls; Najarian Owns (FCX), Is Short (FCX) Calls, Owns (FCX) Puts; Najarian Owns (INTC) Calls; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (TEVA); Najarian Owns (V) & Short (V) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (XHB) Call Spread

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