Closing Trade: I made a closing purchase of the short 65-strike MAY20 CALL for 0.04. This option was sold back on 11th FEB 2020 for 0.10 ($100) and it was closed at 0.04 ($40) for a profit of (+$60).
New Trade today: I sold a JUN20 60-strike CALL for 0.31 this morning for a credit of $310.
My positions now are: short the MAY20 Crude Oil 37-strike at 0.15, and short the JUN20 60-strike CALL @ 0.31. The MAY20 37 PUT expires in 44 days on 04APR20 , and the JUN20 60-strike CALL expires in 72 days on 05MAY20.
The JUN20 60-CALL Prob OTM = 93%
Here a link to the original trade on FEB 11, 2020:
Back on 11th FEB 2020: 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. You can see the details by clicking the TRADE ORIGINATION banner below:
Current Crude Oil Chart (this is of the JUNE 2020 futures):
Comments: The IV%, implied volatility of all the options are of course high right now, which is a good thing for option sellers. The Corona virus threat(s) are not over. The FEDS lower rates .50 today in an attempt to counter the poor economic expectations over the next few months. Almost a certainty that more volatility is ahead.
Gold prices slid down from recent highs near 1700 but have bounced up today by $52 at midday. If there is another high near the recent high of $1697 (basis the JUN20 futures), I might, since IV% is high, sell a CALL up near $1800 if possible. I’ll be shopping for that.
There is talk by medical professionals that the Corona may be like flu in that warmer weather will drastically reduce its spread. I also looked and in the Southern Hemisphere, where it’s warm now, there ARE relatively few cases. If this is true, and we just don’t know yet —- the Corona spread could peak and subside with warmer weather. I felt good selling the 60-strike today not just because of expected weaker demand but also the fact that inventories are already high and will climb more it seems.
Chinese treaty purchases for USA grains are too tentative for me to sell options there. Option Sellers must be cautious with all the uncertainty and high volatility in the market at this time. That is why I have fewer trades on than usual, and it could stay that way for a while. Still, I continue shopping for opportunities. Have a great week and thank you. – Don
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