ACE Crude Oil - March 09, 2020

Below is an illustration trading futures options on Crude Oil.  Our post shows bullish and bearish positions using a combination of call and put options.


Trade Options on Futures

Crude Oil * Directional & Neutral Positions

Get your copy of Paul Forchione's book, "Trading Strangle Swaps".  Learn techniques from a professional options trader to manage risk while speculating on futures markets.

Iron Condors.small

Click here to view Paul's eBook


By using our website, you agree to accept our terms of use (click to read)


Term Structure

wti term


Volatility

Options fall into the category of being slightly overvalued in volatile markets in the weekly options report. Ask about the Weekly Option's Report for more information.

cl optv


Notes:

Contract Size - 1,000 barrels.

Tick Size:  Outright: dollars and cents with 0.01 points=$10

Trading Hours: CME Globex: Sunday - Friday 6:00 p.m. - 5:00 p.m. Eastern Time (CST).

* Tip: Understanding what the numbers mean when looking at Crude Oil prices. The quotation you see is U.S. dollars and cents per barrel (42 gallons). Each contract you are buying or selling is 1,000 barrels.  A 1 tick move is $10 USD calculated as $0.01 x 1,000 barrels. 

?ml=1" class="modal_link" data-modal-class-name="no_title">* Tip: Click here to read a helpful tip about Crude Oil futures and options


Charts

Prices have fallen significantly.

WTI down 10% historic low with a substantial move lower hinging whether Russia with OPEC would cut production. They aren't going along with production cuts so much uncertainty which was a drop on oil prices. Levels are back to 2016 levels. Lots of volume in the April contract.. 

cl daily

cl 4hr

* Tip: To view a larger chart image, simply right click on the image with your mouse. Next, select view image. Be sure to click the back arrow on your browser to go back to the original page.

?ml=1" class="modal_link" data-modal-class-name="no_title">* Tip: Click here on enlarging images


Strategies

Below illustrates a directional play to the upside using a call vertical swap. Alternatively, beneath is a bear call spread to the downside.

The % yield shown in the diagrams below represent an estimated return on margin from projected dates shown below. The structure has positive time decay which is an advantage over holding outright options.

Vertical Swap Bullish

cl vswap bull

Bear Call

Assuming oil continues down further. Volatility is at its highest in the upper 99th percentile.  

cl bearcall

Webcast

Join our Free Webcast each month and learn how these strategies can benefit your trading.


Sign Up Now