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"To give an update on my HE short 67-64 put spread, I experienced the expected max loss on the position. It was a good learning experience on meats and how volatile things can get very quickly."
Yes, that is correct. To give an update on my HE short 67-64 put spread, I experienced the expected max loss on the position. It was a good learning experience on meats and how volatile things can get very quickly.
I am currently short the following …
"Selling options that go ITM and then hoping they end up being profitable doesn't sound like a great way to trade."
There is no more hope in selling short spreads than there is in selling naked options. When a trader sells a naked call for example, do they hope that the underlying does not start rising? Of course not. They know that at some point the trade will move against them, and as long as they have their risk management and position sizing in place, and the keep an eye on the fundamentals and seasonals, then they have done what they can to put the probabilities in their favour.
I am sharing some of my trades so that I can get useful insight/constructive criticism. And for that I am thankful. I am not in any way implying that what I have traded is good, or recommended or that others should do the same. I will no doubt mention trades that raise eye-brows, make others shake their heads in disbelief, but I have learnt a lot from other peoples trades in here, and sometimes its good to mention ridiculous-looking ideas because they may open the door to new possibilities.
She is saying "Natural gas could see a sharp probe lower before finding a seasonal bottom in late-October or November.".
In her writing about this trade she never mentions any fundamentals like very low inventory (-18.7% vs yr avg), high demand or high production.
I think NG is going to continue trading in a narrow range. I have been selling iron condors all summer the last few years. No losing trades. I think that is the way to trade NG April to Oct.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,207
Gun to my head, buy or sell NGZ8, I would rather buy than sell! As you say her trade is based purely on historical seasonals and not fundamentals, but I think the fundamentals are very different this year than they have been for the last several.
I currently hold the following short options positions:
CH P3.70
High supply and high demand.I assume that soon the market will concentrate more on demand, and that the huge supply is more or less priced. Seasonally the price in March should be higher than the price in September. Additionally I hold the CK9-CZ9 spread
LHV P53 / C53
I sold the position at about 5, and will take profit at 50 %. I assume tht the underlying contract will expire somewhere around 53 or 54.
LHZ C62
I am bearish the 2018 contracts. A lot of China is priced, but no hog will be sold to China before expiry of the October contract, and not many until end of this year.
LCV C112
Rest of a P108/C112 position. Due to the bearish CoF report on Friday this option should expire worthless.
LCX C120
Whereas usuall supply tightens into the 4th quarter this year it wil be the other way round. The CoF report supposts this opinion.
Hi Myrrdin. Pls note that the following questions are coming from a place of curiosity, and not a place of criticism.
1) Do you have a short straddle on lean hogs at 53? The Oct future is currently around 61 with 18 days to go. I hope the underlying comes down quick. It certainly looks over-bought, and Hightower seem to think it is.
2) I'm curious why your short CL call spread is so far out of the money, esp. considering the straddle on LH?
Of course, CL is a different commodity to LH and behaves differently, but looking at the current credit on the 85-90 spread, it seems quite low at around 0.32 for a 5-wide spread. (Of course, the margin is very low too.)
ad 1) I sold the straddle for 5, and obviously it is under water. But I am still convinced that LHV will expire around 55 - 56, and this would make the trade a winner. We will see what the Hogs & Pigs report this week will bring. It is a small position, thus, I am not worried.
ad 2) I use different approaches as part of my diversification strategy. I held ATM spreads (C70-75) before, but was stopped out with a small loss. The number of OTM spreads is larger than the number of ATM spreads was. Obviously there is something I do not see, as I did not expect CL going significantly above 70 at this time of the year. Thus, I am more careful now. But before important elections in the US, CL price usually moves lower at this time of the year.
I currently hold the following short options positions:
CH P3.80
High supply and high demand. I assume that soon the market will concentrate more on demand, and that the huge supply is more or less priced. Seasonally the price in March should be higher than the price in September. Additionally I hold the CK9-CZ9 spread. I rolled the P3.70 to 3.80 after the bullish USDA report on Thursday.
WH P4.90
The USDA report was bullish, additionally there are weather issues in Australia, Argentina, and Russia. Thus I sold a small lot.
LHV P53 / C53
This hedged the calls via futures some time ago, but this (small) trade will show a loss at expiry.
LHZ C62, LHZ C60
I am bearish the 2018 contracts. A lot of China is priced, but not many hogs will be sold to China before expiry of the December contract.
(LCV C112)
Rest of a P108/C112 position. The position ended slightly in the money, but the trade showed a profit.
(LCX C120), LCZ C120, LCJ C130
Whereas usually supply tightens into the 4th quarter this year it will be the other way round. The CoF report supports this opinion. Z and J contracts look the most overvalued to me.
I took profit for the LCX C120 at 25 % of the original value, and sold the December options.
CCH P1900
Opened half a position last week, and will add the CCH P1800 if given the oportunity.
ZN P117-P114
Carleys suggestion.
SIH P13.5-P12.5
Extreme COT data suggest a long position in Silver.
My large positions are in corn, hogs, and live cattle.
