Oahu Education - ACE - Crude Oil

ACE - Crude Oil - Jan 22, 2019

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.

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Crude Oil * Directional Position

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CFTC regulation 4.41 requires the following disclaimer:

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT , THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCES RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELEY AFFECT ACTUAL TRADING RESULTS.

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Commentary

WTI up over 3% Friday with new highs for 2019.
Tarriff talk with China initiating imports positive at 53.85 level
Feb and Mar futures are at 2019 highs
U.S. expands leadership into crude while OPEC and Russia agree on production cuts
IEA expects energy markets to rebalance gradually in 2019

Term Structure

Shift into a normalized market.

CL term

Volatility

Crude Oil implied volatility has slowed below historic levels.

CL vol

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 $0.01 tick. Each contract you are buying or selling is is index price x 1000. A 1 tick move is $10. Notional value of $47 / bbl = $47,000 USD.

?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

Crude Oil

Below is the CL charts for reference. Crude in a tug-of-war between U.S. shale transport capacity and push on global demand and middle east edging up prices.

CL Weekly