Soy Meal/Bean Oil Spread: Bearish Pyramid Building Continues

Triple Play

The blog entered a short position in the September soy meal/bean oil (x2) spread at +$500 (premium meal) on July 7th.

The blog then entered a second short position in the September soy meal/bean oil (x2) spread at -$3,386 (premium bean oil) on August 2nd.

On August 15th the blog entered a third short position in the September soy meal/bean oil (x2) spread at -$5,892 (premium bean oil).

September Soy Meal Bean Oil (x2) spread daily

September Soy Meal Bean Oil (x2) spread daily

With the ‘add-on’ entries, the position has increased three-fold.  We are now going to risk all three positions to a two-day close above -$3,892 (premium bean oil), which is $2k above the most recent ‘add-on’ entry price.

Eye On the Ball

Our minimum downside target for the September soy meal/bean oil (x2) spread is the contract low of -$14,778, but we could easily see a descent to -$20,000 (premium bean oil) or lower.  Therefore, we will continue our pyramiding strategy to add every $2k down.

‘Add-On’ Trade Strategy:

The blog will sell another September soy meal/bean oil (x2) spread on a close below -$7,892 (premium bean oil).  If filled, exit all four spreads on a two-day close of $2,000 or more above the entry price of the fourth spread.

If the fourth position is entered, sell another September soy meal/bean oil (x2) spread on a close $2,000 below the entry price of the fourth position.  If filled, exit all five spreads on a two-day close of $2,000 or more above the entry price of the fifth spread.

To enter a short position in this spread, sell one 100-ton September soy meal contract and simultaneously buy two 60,000 lb. September bean oil contracts.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s