08 March 2019 FRIDAY newsletter

Trade Activity:

I have closed out my short Corn JUL19 360-strike PUT today.  I sold it at 3.125 and I just exited (made a closing purchase) at 6.875 for a loss of:    6.875 minus 3.125 = 3.75= -$187.50

My GTC order to close my JUN19 Crude Oil 75-strike CALL at 0.04 was filled.  I sold it for 0.11, profit excluding commissions =+$70.

Summary of My Positions:

Short JUN19 Gold 1500-strike CALL for 2.0 ($200)

Short strangle:
Short SEP19 Crude Oil 80-strike CALL for 0.17

Short SEP19 Crude Oil 35-strike PUT for 0.09  (total of 0.26 = $260)

 Short JUN19 Crude Oil  45PUT for 0.24  (total of 0.35 = $350)

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

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.


ssions is .11 minus .4 = 0.07 = +$70 each.



Corn: I exited my short JUL19 Corn 360-strike PUTs today.  The “rule of thumb” I use as a guide is the “200% rule”.   When the premium doubles, this is the point where I have to consider terminating the trade and taking the loss.  We all know to well that losing trades are going to happen from time-to-time.  Well, this is one of those times.  The goal is to manage an account by cutting losses while they are relatively small – and therefore not allowing them to mount up.

I had expected the China trade talks might hold enough metal to drive up the JUL19 corn.  The seasonal pattern is for Corn to rise this time of the year.  Obviously this has not been the fact so far, so I’m quite willing to take this loss to avoid it multiplying into a much larger loss.  The lack of trade talk progress could be a part of the negotiation tactics but there is just no way to accurately know this at this time.  If this trade ‘turns around’, I will have no regrets about this decision.  I will know I made the decision with the best information available to me at the time.

Energy:  Crude oil is trading down 1.81 dollars per barrel this morning.  Some analyst this morning, cited the weakness of China’s economy as the catalyst for today’s sell-off.  It isn’t unusual for crude to have a price swing of $1.50 to 2.00 per barrel, so the action today might portend further declines next week – but there is no change in the ‘big picture’ at this time.

I’ll be posting commentary on Monday perhaps with some follow up on this.  I’ll also post a video with some tips on trade management.  Have a great weekend.  Thank you. – Don



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