03 June 2019 MONDAY newsletter / trades


New Trade:  I sold the DEC19 short strangle  30 PUT and 90 CALL for .30 ($300) this morning.  I got 0.20 ($200) for the DEC19 30 PUT, and sold the DEC19 90 CALL for 0.10 ($100)

The initial net margin was $881, 165 Days until expiration on November 15, 2019.  The Prob OTM is 95%.  There is a possible ROI of (300/881) * 100 = 34%*  (*potential ROI based on initial margin only, there could be drawdown during the trade.)

Closing Purchase: I made a closing purchase: I bought back my short SEP19 Crude Oil 80-strike CALLs for 0.05 ($50).  I had sold them for 0.17 ($170), so the net profit excl. commissions = +$120

My current short SEP19 Gold 1500 CALL is trading around 1.80 today.  Rather than close per “200% rule”, I’ve decided to wait until tomorrow to take any action on this.  This one still very far OTM, and the stocks have taking a pounding already, so I’ll give it a little more time but watch closely.

Closed out SEP19 80-strike CALLs today (excl comm.):

Quantity   1 each: +$120
Quantity   5 each: + $600.00
Quantity 10 each: +$1,200.00

This illustration is hypothetical only.  It is an approximation that can vary.

Comments:  Here’s the chart for the new trade:  Short 90C/30P DEC19 Crude Oil strangles I sold today.  I hold the market opinion that these strikes should contain price movements until expiration.  As you know, I seldom hold short options until expiration.  I expect more volatility for crude ahead and may adjust the strikes over time.

In taking profits on my short SEP 80 Crude CALL today.  I closed it because I had a nice profit and did not want to keep it at risk.

Comments Continued: 

I await the 4PM Eastern time  CROP PROGRESS REPORT at: https://usda.library.cornell.edu/concern/publications/8336h188j  It seems the planting delays probably have not progressed much , so this report could drive the grains higher. We’ll see.

That is all today. – Don

Don A. Singletary

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