Soybeans: An Alternative to NFP

Soybeans: An Alternative to NFP

Soybeans: An Alternative to NFP
Soybeans: An Alternative to NFP Getty Images

If you are looking for a market that won’t be affected by today’s NFP number, you may want to look at the binary options on soybeans. While beans may not be the most popular thing to trade, this time of year is when the action begins in this market, compared to many other markets in which summer begins a slowdown in trading.

Soybeans have been on a downtrend for a year due to supply and demand issues; and as the planting season has concluded, this week beans have dropped to new 52-week lows.

The chart for the July soybean futures shows some support around the $910.00 to $911.00, area with some resistance just above $920.00.

Interestingly and surprisingly, the end of month and first of the new month trade did not really affect beans this week; but in one week, on June 9th, an extremely important crop production/WASDE report will be released.

 An Alternative to NFP

In the meantime, we think that credit has to be given to the overall trend, and we are looking to take a bearish position if beans rally. Currently, the stochastics are pointing higher; and if beans get back to the $920.00 area of resistance, then that indicator will point to near overbought circumstances. This could be a good opportunity to either sell some at-the-money options for an equal risk-to-reward scenario, or sell some out-of-the-money options that will target the $910.00 support area. The OTM options will likely give the trade an opportunity for a 3:1 return on risk.

In this case, our view is to look at the OTM options. If the $920.00 resistance is breached, then the next sell levels we will watch will be the $928.00 and $940.00 areas.


Note: Exchange fees not included in calculations.

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