This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Spreads, published on Friday, April 21, 2017.
There is a bear futures spread trade opportunity using Live Cattle contracts. Selling the spread on a break of a lower trend line. The market failed to trade above a resistance level near -.200. The Stochastic indicator is starting to hook anticipating downside Momentum. There is a seasonal pattern for prices to fall in this time period.
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.
Sell the October 2017 / Buy the February 2018 Live Cattle spread at -.850 using a stop order, GTC.
Initial Margin = $1,045 Maintenance Margin = $950
Stop loss: Stop loss is -.375 points, above the recent highs, GTC. ($180)
Target: Target is -1.750, the twelve month contract low and Wave Projection, GTC. ($360)
Live Cattle Spread Chart from BarChart
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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