This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Spreads, published on Thursday, October 12 2017.
There is a bear futures spread trade opportunity in Crude Oil. The spread once again failed to remain above the EVEN (0.00) price level. The Stochastic indicator shows downside momentum. The MACD indicator shows a downward trend. There is a seasonal pattern for prices to sell-off in this time period. There are couple of potential support levels to break through before the target is triggered. The stop loss will be trailed down in that case.
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 in this energy market.
Sell the January 2018 / Buy the May 2018 Crude Oil spread at -0.44 using a stop order, GTC.
Initial Margin = $418 Maintenance Margin = $380
Stop loss: Stop loss is -.21, above the 10/11/17 pivot point high, GTC. ($230)
Target: Target is -1.15, the low from last August 17 and a potential support level, GTC. ($710)
Crude Oil Spread Chart from Bar Chart
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