The US - China Trade war has seen a sky rocketing dollar, and crashing commodities. Beans have been hit particularly hard.
Prior to the crash we saw Funds with a very healthy Net Long position of 198k contracts with price at 1028.25 on March 20th. 15 weeks later as price collapsed to a low of 852, this position was reduced to a meager net long of 5k - scoring a weak 31% on a 18 month basis.
Hedge funds added over 100k shorts and offset 97k Longs during the collapse.
One has to wonder if this massive short position will be caught offsides, similar to their extreme Long position back in March? Any scent of a detente in this trade war could lead to a quick reprice, as fund's trailing stops are hit on the way back up. With this backdrop in extreme position we are starting to see a nascent rally with a key Monthly and Weekly pivot of 854 being taken out, as well as price trading back above the 4day channel low.
Option traders seem to agree, with the skew between calls and puts 40cents OTM favoring calls by almost 5 cents.
Due to the uncertainty and danger of trade war headline risk, we are legging into call spreads here. The Sep 880*950 spread will cost you approx 15cents with potential upside better than 3-1.