Greetings on Tuesday, 11 February 2020:
Crude Oil dipped below $50. Just a month ago on 8th January 2020, the MAY2020 futures peaked at 64.39 a barrel. The stock market, depending on one’s view has either ‘factored in the Corona,’ OR chooses to believe it might be under control. All this of course could change on ‘one bad news’ day. And that is a risk to almost any trade these days.
New Trade: This morning I sold a MAY20 Crude Oil short strangle: I sold the 65-strike CALL for 0.10 ($100) and I sold the 37-strike PUT for 0.15 ($150) for a total premium credit of $250. These options expire in 65 days on April 16, 2020 – about two months out. Prob the options expire OTM: 94% Initial Margin: $888, potential return: 28% based on initial margin (which can change of course during the trade.)
There is not shortage of crude in the world and since it has fallen $15 a barrel recently, I think the 37 PUT might be safe over the next 65 days.
Here’s the chart:
I’m also looking to sell a GOLD PUT option. I expect to do this within a week. Gold and the Stock INDEXES are inversely correlated. I’ll stand aside another week to see if the Stock Index goes up even more (and gold prices a little below present prices) first.
If/when the stock market has an adjustment or change, Gold price would shoot up rather fast. I want to sell a far OTM PUT soon and when the market has an adjustment, there could be a nice profit there.
With Corona virus still an unknown, and China Trade Talks anything but firm and reliable, I remain out of the grains for now.
I will post immediately when/if I sell a gold PUT.
If you wish to find out about a new trading product from CME (the new 1/10th size futures) Please checkout my new YouTube Channel, all about the NEW (MAY2019) Micro E-Mini Stock Index Futures at this link: https://www.youtube.com/channel/UC3WzyRqTuFn2iBjBPu-D6HA/ or just use this button:
Have a great week and good luck. – Don
For more info on these books available w/ free prime shipping, please touch or click the cover photo. thanks.
I do a lot of my own trading with TastyWorks because I like the easy-to-use platform and they have lower commissions than most. The customer service is outstanding. I have an affiliate link and recommend them often for months now and I’ve never had any negative feedback. They also have excellent free mobile apps that are easy to use- and they have ACH free money transfers to-and-from you bank account (usually one day free service.) TastyWorks has just joined Schwab, ThinkOrSwim, and other brokers and introduced NO Commission stock trading.
TastyWorks: $2,000 minimum to open account. Easy online application, free ACH money transfers.
Read more about TastyWorks at this link please: http://daytradingmicros.com/brokers/
TastyWorks also has commissions on the new Micro e-Mini futures at only 85 cents.
Have any interest in day trading the new Micro E-mini stock index futures? If so, please consider my new book on the subject available on Amazon: (read more at this link)
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.