This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Spreads, published on Thursday, September 22, 2016.
There is a bear futures spread trade opportunity in the Live Cattle market on a potential M.E.T breakout. Establishing a bearish position where a front month contract is sold and a deferred month contract is purchased. Anticipating the spread to widen negatively. Setting up a futures spread will potentially reduce the risk and volatility, as well as reducing the margin requirement, in this volatile meat market. This trade is in line with seasonal tendencies.
Sell the December 2016 / Buy the April 2017 Live Cattle spread at -.050 using a stop order, GTC.
Entry is a break of the 9/20/16 low. Initial Margin = $935 Maintenance Margin = $850
Stop loss: Stop loss is 1.500 points, above the 9/15/16 high and the 200-day Moving Average, GTC. (Risk: $620)
Target: Target is -1.725 points, near the twelve month contract low, GTC. (Profit: $670)
Live Cattle Spread Chart
Contact your Daniels Trading broker by phone or email to place this trade.
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STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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