This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Spreads, published on Wednesday, March 29, 2017.
There is a bull futures spread trade opportunity using Soybean Meal contracts. The spread traded down to contract lows and have begun to hook up. The Stochastic indicator has hooked up as well showing potential Momentum to the upside. There is a seasonal pattern for prices to rise in this time period. As shown on the chart below the spread rallied 13.0 points just last year.
Establishing a bullish position where a front month contract is purchased and a deferred month contract is sold. Anticipating the spread to widen positively. Setting up a futures spread will potentially reduce the risk and volatility, as well as reducing the margin requirement. Using the Fish Hook pattern to go long the spread on a break of today’s session high.
Buy the July 2017 / Sell the September 2017 Soybean Meal spread at 0.5 using a stop order, GTC.
Initial Margin = $787 Maintenance Margin = $715
If filled:
Stop loss: Stop loss is -1.5 points, below the twelve month contract low, GTC. ($200)
Target: Target is 10.5, the recent rally high in January, GTC. ($1,000)
Soybean Meal Spread Chart
Contact your Daniels Trading broker by phone or email to place this trade.
Risk Disclosure
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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