This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Spreads, published on Thursday, June 16, 2016.
There is a bear futures spread trade opportunity in the Natural Gas 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 energy market. This trade is in line with seasonal tendencies as well.
Sell the October 2016 / Buy the April 2017 Natural Gas spread at negative 2.50 points using a stop order, GTC.
Initial Margin = $913
Maintenance Margin = $830
If filled:
Stop loss: Stop loss is negative 1.85, above a resistance level and today’s contract high (6/16/16), GTC. (Risk: $650)
Target: Target is negative 4.35, above the twelve month contract low (5/27/16), GTC. (Profit: $1,850)
Natural Gas Spread Chart
Contact your Daniels Trading broker by phone or email to place this trade.
Risk Disclosure
STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.