Good afternoon everyone
If you are reading this, you should have received our first trade recommendation around 11:30 am central time today. This is the first trade-able recommendation from the newsletter, we hope it came across clean and understandable. Keep in mind we have clients actively trading these recommendations so our first priority is to get clients into the trade, so in the future you can expect a recommendation via email during the trade session, then after the close around 1 pm central, we will follow up with our “why”. We understand folks are interested in learning as well as profiting, we hope we can accomplish both.
We bought the February 18 lean hog futures while simultaneously selling the October 18 lean hog futures. Our fill price was somewhere around -.55 cents (per hundred weight). Meaning, October hogs were 55 cents cheaper than February hogs. Our goal with the trade is to see that spread widen to somewhere around 2.00. If that would happen our profit would be somewhere around 600 dollars per spread (before fees).
We believe the selloff in October hogs may be getting closer to a bottom than in recent days, but we feel that if prices would rally, we would see the market go into a carry mode. Meaning, February would lead prices higher on increased demand/lower supply as prices fall. We think the October contract represents a “wall of pork” coming down the pipeline. Producers will most likely adjust supply in coming months at these prices and February will perform relative to October.
Please call the desk if you have any questions. We are happy to answer any questions.
Here is a fantastic guide we have on our website that explains futures spreads – CLICK HERE
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.