03 April 2019 WEDNESDAY newsletter

03 April 2019: New Trade today

I sold the short strangle Gold JUL19 1450-strike CALL and 1200-strike PUT for a total of 1.80 ($180) today.  I got 0.9 ($90) for each for the total of $180 credit (not incl. commissions.)

Sold Gold JUL19 1450-strike CALL and the 1200-strike PUT for 1.80 ($180)
Date placed: 03APR2019
Proceeds from options $180.00 (not incl commissions cost)

Probability option expires OTM: 95%
83 Days until expiration (25JUN2019)
Initial BP Effect (net margin required): $1114
Price of Underlying:  AUG19 Gold at: $US 1299.90 / ounce.**
Possible ROI: 16.1%*

*ROI: does not account for possible or likely additional margin that could be required during the trade.
**NOTE: The underlying Gold contract for this JUL19 class of options is /GCQ19, the August 2019 futures contract.

Here’s the chart for this trade:

Comments:  There has been some decline in safe-haven buying due to the improved outlook for China and European economies over the last few days.  One of the attractions I find with this trade is the relatively short time until expiration of only 83 days until June 25, 2019.  The 1450-CALL strike is $150 dollars OTM, while the 1200-strike PUT is only $100 down from current price near $1300 basis the underlying AUG19 Gold futures.  There is of course some risk of more poor global economic news but this is always the case with trades such as this.   If unexpected economic news does come, it will likely be bullish for gold should it inspire more safe-haven purchasers.  A weaker US$ Dollar would support gold prices -and with the prospects of no FED rate hikes and maybe even a decline, the price moves will more likely be on the upside.  At this time, I don’t see anything that compels me to adopt either a bullish or bearish tint for gold prices in the short-term and I mean between today and the expiration date of 25 JUN 2019 (83days.) –  I am shopping for more short gold strangles already in the months ahead in 2019.

Corn: The news today bringing up more China/USA talks with the Chinese delegation in Washington D. C. again this week.  Corn opened up 3.50 cents this morning and is back down to only up 3/4 of a cent at midday and headed to negative territory.  The most optimistic outlook for corn prices would be that China makes huge buys and also promises purchases of USA ethanol.  I want to sell more CALLs on Corn futures, but will wait another few days in case of an unexpected announcement.  With any more delays on these USA/China talks, I will seek more CALLs to sell.

Crude: Though crude oil is trading near 62.50 $US dollars a barrel now, both supplies and stocks don’t seem to support either lower or higher prices in the short terms.  Anything other than the brightest outlook for the world economy presents a rather neutral to only slightly bullish price outlook over the next few months.  Typically, there is a crude oil price rise in the USA from Spring into Summers (Norther hemisphere) with higher seasonal travel ahead.

Just so you know:  I have just finished putting in this gold rectangle in all newsletter issues on this website going back to mid January 2019.  This should help readers be able to easily find and track trades in an easier way than was previously available – and should make the website easier to follow past and futures trades.

Summary of My Positions:

Today’s Trade:

Short Strangle:
Short JUL19 Gold 1450-strike CALL for 0.90
Short JUL19 Gold 1200-strike PUT for 0.90
(total of 1.80 = $180)

Short strangle:
Short SEP19 Crude Oil 80-strike CALL for 0.17
Short SEP19 Crude Oil 35-strike PUT for 0.09  (total of 0.26 = $260)

This new Trade Origination button will take you back in time – to the post where the trade was originally placed, so you can review the chart, fundamentals, and the details of this trade’s selection.   This way you get much more than just the position listing. – DAS

Short Strangle
Short the JUL19 Crude Oil  75-strike CALL for 0.11 ($110)
Short the JUL19 Crude Oil  45-strike PUT for 0.18 ($180)
 (total 0.29 =$290 )

 Short Corn DEC19 540-strike CALL for 2.875 ($143.75)

Short the DEC19 Corn 330  for 2.0 cents ($100.)

To keep illustrations, I post all my trades as quantity of one option.

That is all today. – Don

Don A. Singletary


The commentary and examples are for teaching purposes only and are not intended to be a trading or trade advisory service. Any investments, trades, and/or speculations made in light of  the ideas, opinions, and/or forecasts, expressed or implied herein on the web site and/or newsletter, are committed at your own risk, financial or otherwise. Trading with leverage could lead to greater loss than your initial deposit. Trade at your own risk.   Investors and traders are responsible for their own investment/trading decisions including entries, exits, position, sizing and  use of stops or lack thereof.  This is not a trade advisory service and is for educational purposes only.  The content on the pages here is believed to be reliable - but we cannot guarantee it.