This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Spreads, published on Tuesday, May 17, 2016.
There is a bear futures spread trade opportunity in the Soybean market on a Flat Bottom Triangle breakout today. Establishing a bearish position where a front month contract is sold and a deferred month contract is purchased. Anticipating the spread to narrow to zero, and then widen negatively toward a major resistance level. A price range from last mind-November to mid-April. Setting up a futures spread will potentially reduce the risk and volatility, as well as reducing the margin requirement, in this active grain market.
Sell the August 2016 / Buy the November 2016 Soybean spread at 11’0 cents using a limit order, GTC.
Initial Margin = $605 Maintenance Margin = $550
Stop loss: Stop loss is 17’0 cents, above the upper trend line, GTC. (Risk: $300)
Target: Target is -4’0 cents, the potential support level, GTC. (Profit: $750)
Soybean Spread Chart
Contact your Daniels Trading broker by phone or email to place this trade.
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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