Tariff Talk Leads To Great Opportunity In Soybeans

Philip Davis profile picture
Philip Davis


  • Trump's tariff war with China has depressed soybean prices.
  • We have a nice entry on the September Futures at $825.
  • We have a nice entry on the ETF (SOYB) at $14.50.

We still have the weekend to get past though and China WILL retaliate and it seems they've already started as no one bought our bonds this week at the note auctions. China is holding $1.1Tn of our Government's debt and they could begin selling it, which would quickly make it hard for us to get a good price at our own auctions and that would quickly drive up US interest rates but it would also devalue their remaining low-interest bonds - so it's a tricky move for them to make. Simply stopping purchases would hurt us plenty.

China is also America's largest customer for Soy Beans and Soybean Futures have been collapsing, down 15% since April and, if you believe in a trade deal, you can make money playing (NYSEARCA:SOYB) bullishly. Right above, our own President is telling the farmers not to worry because he will be happy to help them by buying Soybeans, etc. and handing them out to the poor and of course our President would never lie to farmers so I can't imagine why traders wouldn't jump on Soybean Futures - the September contracts are /ZSU19 at $825 and that gives Trump all summer to come through on his promises. Any takers?

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, although it an be tough betting on Trump here, 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

This article was written by

Philip Davis profile picture
Philip R. Davis is a highly respected options trader, entrepreneur, and founder of philstockworld.com, one of the most influential stock and options trading sites on the web. With over 20 years of experience in the financial industry, Mr. Davis has earned a reputation as a trusted authority on options trading, equities, and macroeconomic trends. As the creator of Phil's Stock World, Mr. Davis has built a vibrant community of traders and investors of all levels, providing them with unparalleled insights, analysis, and trading ideas. Whether you're a beginner or a seasoned pro, Phil's Stock World offers valuable resources that can help you navigate the complexities of the financial markets and achieve your investment goals. With a unique approach to teaching the art of options trading, Mr. Davis and his team of expert contributors including Optrader, Sabrient, Income Trader, Trend Trader, and Warren the Trader AI provide members with live chat sessions during trading hours, real-time trade alerts, and in-depth technical and fundamental analysis of hundreds of stocks. In addition to his role as an options trader and financial guru, Mr. Davis is a serial entrepreneur and founder of several successful companies, including Accu-Title, a real estate title insurance software solution, and Personality Plus, a precursor to eHarmony.com. He is also the President of Delphi Consulting Corp., an M&A consulting firm that helps companies of all sizes obtain funding and close deals. With his unique blend of wit, humor, and financial acumen, Mr. Davis is a sought-after speaker on options trading and financial markets. His writing style is both entertaining and informative, providing readers with specific and actionable trade ideas, as well as deep insights into the macroeconomic forces that drive market trends. In short, if you're looking for a trusted and experienced options trader and financial expert, Philip R. Davis is the real deal. Join the growing community of traders and investors at Phil's Stock World, and start profiting from his insights and analysis today.

Disclosure: I am/we are long SOYB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Positions as indicated but subject to RAPIDLY change (currently mainly cash and an otherwise slightly bearish mix of long and short positions - see previous posts for other trade ideas).

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