Toppy Tuesday (as usual) – Why Did China Go Home?

Trade on!  

That's right, now Donald Trump claims he was "surprised" when Treasury Secretary Steve Mnuchin asked China's trade delegation to cancel a scheduled US Farm Tour.  That was the cause of Friday's sell-off as the Chinese delegation packed up their toys and went home early and was taken as a sing that negotiations had broken down but now the Administration says that's not the case and that the Chinese were rushed home so they could buy our agricultural products rather than visiting the farms first.  

Despite all the BS, we couldn't be more thrilled as we called Soybeans (/ZSU19) Sept Futures a long way back in our May 10th Morning Report at $825 (published at Seeking Alpha) and those contracts popped to 888.50 and October Soybean contracts are now $895.50.  Soybean contracts pay $1,120 per $1 move so $63.50 for our September longs is a lovely $71,210 gain per contractyou're welcome!  

For the Futures Impaired, we also had the following trade idea on the Soybean ETF (SOYB) that runs into November:

As to SOYB, it hasn't been this low since, well, ever – as the contract began in 2012 at $25 and never really went below $17.50 until the trade war began so $14.50 is quite a bargain and, as much as I hate to bet on Trump doing anything right, it's POSSIBLE we get a trade deal and that will hurt our hedges in the Short-Term Portfolio so, in order to hedge the hedges, a bullish bet on SOYB makes sense.  For the STP, we can:

  • Buy 50 Nov $14 calls for $1.10 ($5,500) 
  • Sell 50 Nov $15 puts for 0.95 ($4,750) 

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