Greetings: 06 August 2019 TUESDAY TRADE COMMENTARY
Stocks and Gold: None of the markets today seem to be presenting much bias either up or down, so I’m still on the sidelines. Oil, Gold, Stock Indecies at midday are all steady, which keeps me in a cautious mood. Sometimes, the most difficult thing to do is nothing. I priced a NOV19 Gold strangle, the 1800 CALL and 1375PUT. The premium about $540 for a Prob . OTM of 90% and the minimum margin was $1920, which seemed (although I’m sure it’s correct) a bit too much for me to take the plunge. The 1800 CALL and 1325 PUT was priced around $300 and Prob OTM about 97%, but then I checked the trading volume for the day and it was only 115 and 47 for the Call and Put, respectively. With potential volatility in the air, I didn’t like the low volume.
FYI: Low volume and/or low Open Interest can find a trader unable to liquidate a position at an efficient price, particularly in times of very high volatility.
The strikes that are closer-to-the-money – have more volume but the “Prob OTM” is too low.
Corn: I’m still waiting for the August 12th USDA’s WASDE (World Ag Supply-Demand Estimates) at noon next Monday.
Oil: While global economy is always a factor – the fundamentals of supply-demand have much more sway with short-term oil prices. While I’m cautious, I’ve chosen to remain holding my positions: The OCT19 40P to 75C—- and the 40P to 80C ranges of my current positions still seem workable.
The stock market risk is palpable at present. Stock prices are at high levels and for investors to remain invested where such risks exist – will require long equity holder to believe the potential will have to outweigh the possible downside. The health of the market is the “tide that raises and lowers all boats”, and if there is a major retreat in stocks, even those with healthy earnings are subject to decline. Even if equity holders decided to take a part of profits and leave the rest at risk, there could be a large move ahead.
I’m very involved in studying and watching current events. Stay tuned.
-Don
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.
Greetings: 06 August 2019 TUESDAY TRADE COMMENTARY
Stocks and Gold: None of the markets today seem to be presenting much bias either up or down, so I’m still on the sidelines. Oil, Gold, Stock Indecies at midday are all steady, which keeps me in a cautious mood. Sometimes, the most difficult thing to do is nothing. I priced a NOV19 Gold strangle, the 1800 CALL and 1375PUT. The premium about $540 for a Prob . OTM of 90% and the minimum margin was $1920, which seemed (although I’m sure it’s correct) a bit too much for me to take the plunge. The 1800 CALL and 1325 PUT was priced around $300 and Prob OTM about 97%, but then I checked the trading volume for the day and it was only 115 and 47 for the Call and Put, respectively. With potential volatility in the air, I didn’t like the low volume.
FYI: Low volume and/or low Open Interest can find a trader unable to liquidate a position at an efficient price, particularly in times of very high volatility.
The strikes that are closer-to-the-money – have more volume but the “Prob OTM” is too low.
Corn: I’m still waiting for the August 12th USDA’s WASDE (World Ag Supply-Demand Estimates) at noon next Monday.
Oil: While global economy is always a factor – the fundamentals of supply-demand have much more sway with short-term oil prices. While I’m cautious, I’ve chosen to remain holding my positions: The OCT19 40P to 75C—- and the 40P to 80C ranges of my current positions still seem workable.
The stock market risk is palpable at present. Stock prices are at high levels and for investors to remain invested where such risks exist – will require long equity holder to believe the potential will have to outweigh the possible downside. The health of the market is the “tide that raises and lowers all boats”, and if there is a major retreat in stocks, even those with healthy earnings are subject to decline. Even if equity holders decided to take a part of profits and leave the rest at risk, there could be a large move ahead.
I’m very involved in studying and watching current events. Stay tuned.
-Don
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.