This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Spreads, published on Tuesday, May 16, 2017.
There is a futures spread trade opportunity in Sugar. This particular spread traded down to setup a two year low recently. There is a seasonal for the front month contracts to advance on the deferred month contracts in the near term. The stop loss will be placed below the spread low. The MACD indicator shows the beginnings of an uptrend. The Stochastic indicator shows bullish momentum.
Establishing a bullish position where a front month contract is purchased and a deferred month contract is sold. Anticipating the spread to widen toward zero, then positive. Setting up a futures spread will potentially reduce the risk and volatility, as well as reducing the margin requirement.
Buy the October 2017 / Sell the October 2018 Sugar spread at -.54 using a stop order, GTC.
Initial Margin = $1,210 Maintenance Margin = $1,100
If filled:
Stop loss: Stop loss is -.94 points, below the contract low, GTC. ($200)
Target: Target is .60, near a 50% Fibonacci Retracement, GTC. ($570)
Sugar Spread Chart from Bar Chart
Subscribe to Trade Spotlight Suite – Paid Edition – Quarterly
Trade Spotlight Suite – Paid Edition – Quarterly - Trade Spotlight is a suite of email advisories and provides futures, options and spread trade setups accompanied by definitive trade management. Trade setups are developed by applying the GBE trading methodology of chart formation breakouts confirmed through key technical indicators.
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.
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.
