ACE - Crude Oil - Feb 10, 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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CL cme

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Term Structure

Contango.

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 with market moving in a tight range. 

CL April


Strategies -

Below are illustrations of Vertical Spreads based on a 1 lot.  These are explained in Paul's book, "Using Futures Options for Day Trading & Hedging".

CL BEARCALL

CL BULLPUT

For illustration, compare against purchasing 2 x March Calls

CL LongCallx2

An illustration of a Strangle Swap using front and deferred month combinations. Position is projected as being held till end of month and would be adjusted if markets moved to extremes in the range.

CL sswap


Below is a link to CME settlement prices last Friday.

CL Play