I sold Crude Oil FEB20 short strangle, the 80 CALL and 35 PUT for 0.33 ($330) this morning. (.15 for 80C and .18 for 35P) Initial Margin: $930 Underlying: FEB20 Crude Oil: $54.53 (/CLG20) Potential ROI: 35.4% (based on initial margin requirement) Days Until Expiration: 107 Expiration Date: 15 JAN 2020 Prob. of expiring OTM: 35P = 95% and 80C = 98%
Comments: Crude supplies are plentiful and global demand steady but could weaken over the next few weeks. Hard to think that the expiration date for these options is only 107 days away on January 15, 2020.
New Trade: Gold: FEB20 gold is trading $1483 this morning. Prices have fallen from the $1570 area. I sold the FEB20 1900-strike CALL for 1.9 ($190).
Initial Margin Required: $1350
Prob of exp OTM: 98% Expiration: 28 JAN 2020 (120 days)
Potential ROI: (base on initial margin) 190/1350 = ~ 14%
Comment: Gold has fallen $88/ounce since the first week of September. If stocks continue to climb or range trade a while, the gold could fall more. I choose the 1900-strike CALL to sell because is has good open interest and far enough out-of-the-money with enough premium to make the trade worth it. When / if gold falls even more, I will consider shorting a PUT in the same class (FEB20) to form a short strangle.
As of today, I hold these two new positions, plus this trade: Short DEC19 short 420-strike CALLs, see:
I still want to sell DEC19 Corn PUTs again, but feel prices are soft and could go down more soon. I’m aside until more info is available in the OCTOBER 2019 USDA/ WASDE report.
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