I am Stephen Davis, senior market strategist at Walsh Trading, Inc., Chicago, Illinois. You can reach me at 312-878-2391.
Last week, soybeans rallied 90.0 points. This week, I can think of two reasons to be bullish on soybeans based on the two charts below. First is the daily chart with the 200-day moving average depicted by the dark line. Any market above the 200-day moving average is bullish, in my opinion. The second chart is a weekly reversal up in soybean futures. These weekly chart patterns showing reversals up are a rarity, in my opinion.
Last month, I mentioned that China's economy is growing. Its Gross Domestic Product (GDP) will hit the target of 5%, said Chinese President Xi Jinping in his 2026 New Year message. This growth could lead to China buying more U.S. soybeans. Meanwhile, the possibility of adverse weather affecting crops in North America or South America is a reason to implement a trading strategy now, in my opinion.
A bullish trade strategy is to buy May 2026 soybean futures at 1129.0 good til cancelled (GTC). Risk the trade and sell May 2026 soybean futures 1119.0 stop GTC. Profit objective is to sell May 2026 soybean futures 1149.0 GTC. That is a ratio I like: risking one to make two.
A bullish option trade strategy is to buy November 2026 soybean 1100.0 calls and sell November 2026 soybean 1200.0 calls. Pay 30.0 ($1,500) for this simple call spread. Do this and put it on the back burner for a month or so. There is a lot of time in this spread and if adverse weather occurs, you will be in the option strategy.
To discuss trading strategies, contact me anytime. Have an excellent day.
Stephen Davis
Senior Market Strategist
Walsh Trading
Direct 312 878 2391
Toll Free 800 556 9411
sdavis@walshtrading.com
www.walshtrading.com
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Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.
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