Novice Trade: Teucrium Soybean ETF
The Trade: Buy 1 SOYB August 17 call for $0.35. The Teucrium Soybean Fund ETF (SOYB) has traded between a low of $15.98 and a high of $19.64 over the past 52 weeks. So far this year, the stock has declined 9%. That decline began recently and in earnest when the tariff war, or words, began between the U.S. and China. More than 80% of the world’s production of soybeans comes from the U.S., Brazil and Argentina. The seasonal planting calendar and weather has a big impact on the price of soybeans, as a turn in the weather trend can affect the supply of soybeans. Also, demand is ever on the rise, while supply is always in question. And now toss in China’s tariffs threats. SOYB has now formed into my washout pattern. The SOYB one-year stochastic, as well as the Relative Strength Index, are now trading at their respective range lows. That dynamic leaves an upside vacuum for SOYB to possibly fill, maybe doing so “in a hurry.” Now, should any lack of follow through as regards China, tariff threats, etc come into play, that upside vacuum for SOYB could be substantial. The trade tactic I prefer now for SOYB is the long call shooter expiring in August. As with any and all shooter trades, they are very high in risk. The trade is as follows: Buy 1 SOYB August 17 call for $0.35. The suggested target to close for a gain is a bid of $0.85. Best to scale into the position using Limit orders. Also, always consider this type of trade, a commodity futures-related trade, as very high in capital risk. Thus, best to use highly discretionary capital only.
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