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So I have 10% of capital to apply to another trade this month to reach my 30% allocation to margin. Strangles in CL and NG in place. So starting a little diversification. Considering RB with its lift in its volatility. Any suggestions where I might look? Have also thought ES puts at 1500. Just not sure where to start. So used to the one commodity a month trade! Your ideas will be appreciated.
RB is very volatile, and is usually correlated to CL. I'm in CL puts and RB puts right now, and I really look at that as one position. Some markets I am heavy in right now:
Soybean Puts
Nat Gas Calls
Nat Gas Puts
30 Year Bond Calls
Gold Puts
Cocoa Calls
By "heavy" I mean that those positions use between 10-15% of my total margin. That is normally as high as I go - that way when I am wrong, it is not a killer situation.
Kevin, Appreciate the reply. You might remember your reply to my question on diversification from a few months ago. I absolutely agree with your approach. It is just taking me a while to get there. I have traded CL singularly for so long it has been hard to think elsewhere. That's why the work on seasonality - an attempt to understand the other options. This is helping. But it is not experience. You have given me some home work to do before tonights (AU time) session so I best get to it! Cheers Mate!
That makes me feel good. I was starting to wonder about my decision. I sold some Dec NG 5 and 5.1 calls in past few weeks, and am still around breakeven on them (they were in the red for a while). Not as high of an ROI as what you have, either.
I think sometimes when I see something I like, it is better to wait a little bit and see if it gets better. Dec NG was a good example, since up until a few days ago, it had been going up. I hate missing out, though too!
Waiting is 50-50 whether it is a good idea or not. So I have quit waiting for a better price. Unless there is news coming out that might move prices in your favor.
This reminds me of something I read a week ago. The analyst said back in late July to buy CC futures, but wait for a pullback. A pullback never came and he missed out on a very good return.
