CLF5 65P, bid 0.02, ask 0.04, 70P bid 0.04, ask 0.08.
Right now, CLF5 is about 91.7, I want to 24, 25 OTM of the price to be safe, so, 70P feels a little risky, 65P feels too little meat.
I have watched CL for quite some time, I got my first trade yesterday at 0.01 CLZ4 65P (most of you don't even consider or maybe take profit at that price:-). I am trying to get the second trade. I always feel CL or NG risky, so I want to be as much as OTM possible.
I finally heard back from TOS (customer support is very lacking). Apparently they have a SOM (Short Option Minimum) of 330 per option. I think this is far in excess of the SPAN minimum, and it ends up overriding the SPAN calculation. The net effect is there is no benefit to trading FOTM strangles at TOS from what I can tell. Bah
What is your net profit going to be on those CLZ4 65P? $5? Is that really worth the unlimited risk involved? Your ROI may be over 2%, but you'd have to sell a bunch (20!!!) to make $100. 20 contracts gets unwieldy really fast if prices go against you...
If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Last edited by kevinkdog; September 24th, 2014 at 04:10 PM.
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I sold 4 @0.01, IM total 145.2, excess 290.4, delta 0.00, DTE 55, ROI about 5% (still getting free trades in OX). You are right, I will be more cautious, just could not find the right strike. I am still in the testing mode. What CL position you have now if you don't mind?
The implied volatility has been on a steady march higher and it's accelerated recently. Pretty dramatic, even in the forward months (March shown). Seems odd ... shoulder season, fairly tight trading range for the last two months, building stocks back up at a healthy clip, no hurricanes and so on. Last year the same time period saw IV flat as a board until right after Thanksgiving. Any ideas? I know the storage report is in the a.m. but IV has moved higher right through those for the last couple of weeks.
Summer is over, Winter approaches, time to start banging the drums of fear...
More seriously it is true we have been "building stocks back up at a healthy clip" in fact I believe we have injected more gas this injection season than any other on record. The fact still remains though that stocks are currently 11% below last years stock level and 12% below the 5 year average. ICE's end of season storage futures are currently 3515/3540 which would imply that at the end of the injection season we will still be 8% below last years stock levels. If we go into winter 8% below last year, and then get another winter the same as last year ....