This months new Seasonal Spread idea really stands out. We spotted this trade with a sell signal early July. Although the correlation to the historical trends are really high percentage, I really did not like the stagnancy of the price action. I set a sniper alert on my own iPhone for this trade and here it is.
We are looking to sell December 2018 Live Cattle ticker symbol /LE and buy February 2019 Live Cattle. This is an Inter-market Spread, so it will be recognized by the Exchanges as a Calendar or time spread and will have privileges of Span Margin discounts. Initial Margin $660 Maintenance Margin $600. This is a very nice discount to get in on this trade opportunity.
We are looking to enter this trade on 10/15/2018 at a price of -4.20 and potential exit between price level -8.0 and -10.0. Each point here is worth $400. So we are looking for a possible gain of $2,320 per contract and a possible stop at $800, approximately over the 30 year highs at this time frame.
If you are new to this stuff, please do not trade, just follow along what I am doing. If you have some futures experience try to slowly exercise this trade on paper and see what results you get.
As of this post is being published I am revamping our boot camp course that will help you all out one way or another. I can almost promise this. Of course be aware of Risk Disclosures and dangers of trading.
TRADE UPDATE 11/7/2018
For those of you that took this trade and got most of the meat off the bone before Open Interest Started moving their positions out, good job! This was a very close call. Sometimes begin greedy does not pay the bills. Be careful when trying to everything out of this trade. I personally myself made $500 on this spread trading one contract only. A lot of people say spread trading is boring and not fun. How about if you compounded this contract? It was a month long trade. If you had the money in your account to offset span margin increases and other diversified trades and allocated 10 contracts here you would be up $5,000, on a total of a $6200 Margin requirement. We got an indicator to get out when we saw the exchange double the margin the day before. This was my personal indicator to get out of the way.
Futures and Options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.