Soybean Bull Call Spread
There is a trade opportunity based on potential M.E.T. breakout in the Soybean futures market. The Stochastic indicator is showing strong Momentum to the upside. The Trend Seeker is currently down, though with a weak ranking. The MACD indicator has shifted bullish already.
A break of the 1/05/18 session high (987’6) triggers an entry to the upside. The futures margin requirement and the potential risk are relatively high; let’s anticipate the breakout by entering a bull call spread position. This strategy will reduce the risk and require no margin requirement. The potential stop loss is a break of the recent lows near 966’0. The potential upside target is the potential resistance level near 1035’0.
Purchase: May 2018 Soybean 980/1040 call spread on 17’0 cents or $850, GTC.
Maximum Risk: $850, not including commissions & fees.
Maximum Profit: $2,150 ($3,000 – $850), minus the commission & fees.
Expiration: April 20, 2018 (92 days). No margin requirement.
May 2018 Soybean Chart from Bar Chart
This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Options, published on Thursday, January 18, 2017.
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