21 February 2019 THURSDAY newsletter

21FEB2019 THURSDAY New Trade Today

New Trade Position:  Short Strangle

Sold Crude Oil JUN19 45-strike PUT and 75-strike CALL for 0.35 (or better.)  Credit= $350
Date placed: 21FEB19
Proceeds from option $350.00 (not incl commissions cost)

Probability option expires OTM: 92%
84 Days until expiration (15MAY2019)
The underlying JUN19 Crude Oil (/CLM19) is at: 57.93 at the time of the trade.

Initial margin net is approximately $886
Potential ROI: 39.50% *

* 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.  I am just stating that it would be misleading to say the the ROI on the trade is “39.50%.”  To make the ROI of 39.50% the trade would have to have no drawdown at all and the option would have to be held until it expires.

Here’s the Chart illustrating this short strangle:

This short strangle 75C/45P has been trading at 0.30 to 0.37 this morning, a range of $300 to $370.  I originally put in my order at 0.36 and it didn’t execute, so I did a “change and replace” order at 0.35 and it was filled.  My thinking is that I would just as much like to place the trade at $340, $350, $360….and ten dollars one way or the other makes absolutely no difference to me.  If a trader decides to always enter orders on the ‘edge’ to try and make another $10 or $20, that is his/her prerogative.  My personal opinion is that it’s a waste of time and could equally work “for” or “against” the trader.  $10 out of $350 is only a 2.8% difference.  I like to think “bigger picture” and $10 one way or the other makes virtually no difference.

My “market view” on Crude Oil prices has not changed in the last few days.  Although I can’t be certain, (one never can) it seems a range of $48 to $60 over the short term is likely.  I always monitor the daily news and price ranges of the underlying in all trades and make any changes in my outlook a part of my daily decision to hold or liquidate the trade.  It isn’t unusual for crude to trade from .50 to 1.50 dollars up or down in a single day, so I don’t find any large significance in that.

 Summary of My Current Trade Positions:

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


Short the JUN19 Crude Oil 70-strike CALL at 0.420 ($420)


Closed Trade: GTC filled ON Tuesday 19FEB: Short the JUN19 Crude Oil 40-strike PUT at 0.30 ($300)  GTC entered to buy back at 0.13 or better


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.


In an effort to add more value for subscribers, I am in the process of producing a series of short videos on the “how to” of Time Farming.  I’d like to hear comments if you have ideas about things you would like to see covered in these training videos, please send them to me at Don@WriteThisDown.com   Thank you.  That is all today.  Good trading to all – Don

Don A. Singletary

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.