05 March 2019 TUESDAY newsletter

Crude Oil: Two items today.

My GTC order to close my Crude Oil JUN19 70-strike CALL @ 0.15 was filled yesterday (Monday). My profit was $270 per option.

NEW TRADE: I sold the SEP19 Crude Oil short strangle, the 80-strike CALL and the 35-strike PUT for 0.26 ($260)
Date placed: 05MAR2019
Proceeds from option $260.00 (not incl. commissions cost)

Probability option expires OTM: 96%
163 Days until expiration (15AUG2019)
The underlying SEP19 Crude Oil (/CLU19) is at: 58.73 at the time of the trade.

Initial margin net is approximately $565
Potential ROI: 46% *

 * This ROI is probably not the final ROI due to primarily two reasons:  The trade (all trades really) can require additional margin and often does during a trade, AND most shorted options are closed prior to their expiration date.  Nothing unusual about this.   To make the ROI stated, the trade would have to have no drawdown at all and the option would have to be held until it expires.  I look at all trade’s ROI, one of criteria I use to evaluate the efficacy of a trade.

Here’s a look at the SEP2019 Crude Oil Futures chart with the strikes of 80C and 35P marked:

As I discussed in yesterday’s commentary (04MAR2019), I was able to close the JUN19 70-strike yesterday – and sell a new short strangle on the SEP19 Crude Oil this morning. The potential ROI on this trade looks great to me.  I did discuss selling it at $300 in yesterday’s commentary but decided not to dicker about $40 difference, so placed the trade today.

 Summary of My Current Trade Positions:

New Trade Today: SEP19 Crude Oil short strangle, the 80-strike CALL and the 35-strike PUT for 0.26 ($260)
(Sold the 80C for 0.17 and the 35P for .09)

Short Strangle JUN19 Crude Oil  75CALL/45PUT @ $350  (75C @ 0.11 and the 45P @ 0.24)

  Short the JUN19 Gold 1550-strike CALL  for 1.10 cents ($110)

Short the JUN19 1200-strike PUT for 1.40 ($140)

Short the JUL19 Corn 360-strike PUT at 3.125 ($156.25)

Note:  I always use examples with a quantity of 1 (one) option per trade.  This is not because I only trade one of each option, it is to keep the illustrations simple and easy to understand in the newsletter.  Please remember the strategies of the trades I post here are risky, and not suitable for all traders.  Posts here are for educational purposes only.

Please remember this type of trading is not appropriate for all investors and it is risky.  This website and newsletter is for educational purposes only and not a trade advisory service.

-Thank you.  All the best – Don




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