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So after a bit of a reset I'm up and running again with a different broker and looking at new trades after learning my lesson the hard way with CL.
Here's what I'm thinking based on what I see in the market
1. Sell put for Coffee at $87.5 May 15th
2. Sell put for ES at $1500 April 15th
3. Sell put for CL at $29 May 15th
All of these have a delta between .01 and .02. Just wanted to get some thoughts on this. I'm waiting for a week or so to see if there's a pullback in the S&P off of the last high.
The CL is the one that gives me the most pause for thought. I may just avoid putting it on entirely given ron99's previous advice of being at least $25-$30 OTM.
I'd love to get some feedback.
Last edited by rsm005; February 24th, 2015 at 07:14 PM.
I am also looking fpr selling puts in coffee and WTI crude oil, but I am not sure if we have bottomed alreads. The funds started adding shorts in December, and there is still a lot of way to go. In Crude my potential entry point is around 45 $.
I do not think we will reach 87.5 $ in coffee or 29 $ in Crude, but I suggest you check the value of your options at 120 $ (coffee) and 45 $ (crude oil) - they might be rather expensive.
Best regards, Myrrdin
The following user says Thank You to myrrdin for this post:
One thought I did have for coffee was to do the following strangle.
Sell 3 calls at $300 for May 15th
Sell 3 puts for $85 for May 15th
This gets me one strike further on the put side and gives me a bit more premium. You're right about a higher downside for coffee in the near term, I read that in the latest hightower report. I'm thinking of selling the calls now and legging into the put side when the opportunity is a bit better.
I'm using TOS to give me these numbers right now so I'm not sure what the deltas, premiums, volume, and margin will be once the market goes live.
So it appears my idea of a coffee strangle is just not going to work. There's just not enough volume far enough out to make the risk tolerable. Also given the slightly higher fees on ICE is not really going to make enough money to make the trade worth it, at least not right now.
I did end up selling the strangle with oil
3 CL P25 April 16th for .04 Margin $525
3 CL C80 April 16th for .05 Margin $355
Watching coffee and S&P e-mini until the current trend shakes itself out before I step in and make a trade on the put side.
Last edited by rsm005; February 25th, 2015 at 01:37 PM.