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💡 $357 profit with 72% PoP STRANGLE - #1 trade in my challangeTrade Overview: Initiated my first options trade for the annual challenge on January 2nd with an IWM strangle. Observing high IVR in the index, I capitalized on the recent VIX spike to enter the 45DTE 212/188 strangle for 3.57cr. Trade Management: Rolling Strategy: Will roll legs as needed before expiration if price diverges. Loss Management: With a FWB:12K account, I'm capping floating loss at $200. Closing Strategy: Targeting to close around 21DTE. Trade Details: Symbol: IWM Option Type: Strangle 45DTE Entry Date: January 2, 2024 Entry Price: 3.57cr Required BP: $1681 Max Profit: $357 (20% of capital) PoP: 72% Positions: IWM Feb 16, 2024 212.00 CALL - Sell | Price: 1.76 | Qty: 1 | R. PnL: 0 | Commission: 1.251 | Fees: 0 IWM Feb 16, 2024 188.00 PUT - Sell | Price: 1.81 | Qty: 1 | R. PnL: 0 | Commission: 1.2511 | Fees: 0 Key Metrics: Tasty IVR: 42 (High) Breakevens: 184/215
AMEX:IWM
by TanukiTrade
Managing Oil Risk Around OPEC MeetingsRudyard Kipling wrote in his famous poem, “If you can keep your head when others are losing theirs and blaming it on you, then you’ll be a man, my son.” Shocks from OPEC decisions can leave even the experts on the edge of their seats. Short-dated options on crude oil are tailor made to address and manage such idiosyncratic risks helping each trader become a man of his own making. OPEC’s 187th meeting will be held on 30th November. On 22nd November, OPEC announced that the meeting was going to be rescheduled from its original date of 25th November. This is not the first time that OPEC meeting is being postponed. The 23-member OPEC+ alliance has competing interests which makes agreement among members difficult at times. Like last year, this time again, OPEC is rescheduling its meeting. Such news impacts oil markets hugely. Prices tanked. Put option premiums spiked. Put volumes broke records. Implied volatilities jumped 8.5% over three days. DISAGREEMENT OVER PRODUCTION QUOTAS ARE BREWING AT OPEC Not only was this meeting postponed but it will be held online instead of in-person. This is not the first time. This also occurred a year ago. It shifted its meeting online after fixing production targets at an in-person session in Vienna previously. Rescheduling of meeting is reported to be due to disagreement over production quotas. Following this announcement, Brent crude prices tanked 5% but rebounded swiftly to trade 2.3% lower. WTI fell 2.6%. As reported by Javier Blas of Bloomberg, deferment of OPEC production meeting stems from production quota arguments. The Financial Times reported on 17th November that OPEC was considering an incremental one million barrels per day (bpd) reduction. This is in addition to previous production cut commitments from Saudi Arabia and Russia. 2024 is looking precarious for the OPEC. Feeble demand growth compounded by a backdrop of elevated supply growth. The possibility of the OPEC+ deal of production cuts imploding is small but cannot be ruled out. A failure to come to an agreement can leave the oil market with uncertainty ahead. IMPLICATIONS OF DEAR OIL Equity and bond markets globally are in a celebratory mood on cooling inflation. Any shocks to the oil market could send inflation back up again. Refined fuel inventory levels look precariously low at levels unseen since 1982. Diesel and Heating Oil Inventory Levels are precariously low (Source: Bloomberg ) Compounding low refined fuel inventory is the continued low levels of US Strategic Petroleum Reserves which are at a forty-year low. US Strategic Petroleum Reserves continue to languish at 40-year lows BEARS ARE CHARGING OIL PRICES LOWER Crude prices are down about 20% from its September peak. Solid output from the US, and feeble indicators from China have sent oil prices cooling despite elevated geopolitical threats. Since touching a high of USD 95/barrel on 28th September, prices have steadily declined with spurts of bear market rallies. US West Texas Intermediate first continuous futures contract has traded exhibiting strong mean reversion for much of this year Technicals point to near term overall weakness. Momentum indicators point to sharp sell down risks. Mean reversion indicators point to ambivalence with a neutral direction signal. US West Texas Intermediate second continuous futures contract has traded exhibiting strong mean reversion for much of this year Global oil markets are expected to move into surplus early next year, according to the International Energy Agency on slowing demand growth. OPTIONS MARKET SIGNALS NEAR TERM BEARISHNESS AND LONGER-TERM BULLISHNESS Pricing of options expressed by way of implied volatilities shows that puts have been more expensive than calls. As a result, the skews are supressed and hovering at 7-month lows. Cost of options expressed in implied volatilities have shot up for puts relative to calls pushing skews down (Source: CME CVOL ) Inline with the behaviour observed in implied volatilities, charts below summarise the change in open interest between close of markets on 23rd November and 17th November. Participants have been ramping up puts relative to calls except for options expiring on 29th November and 1st December . Notwithstanding the positioning of traders and portfolio managers on near term options, options traders have a strong bullish position in longer term (going into latter part of December and next year) with put-call ratio at 0.63 implying five calls (bullish trades) for every three puts (bearish trades). Open Interest across the forward curve shows higher number of calls relative to puts (Source: CME QuikStrike ) The brewing disagreements among OPEC members are impacting implied volatility on crude oil options. CVol index on crude oil jumped 15% over merely 3 days on the announcement of OPEC meeting postponement. Volatility has been on the rise amid the ongoing lack of co-operation within the OPEC cartel (Source: CME QuikStrike ) HYPOTHETICAL TRADE SET UP The path ahead for oil prices looks uncertain. Volatility has spiked and could rise even higher on growing disagreement among OPEC members. If OPEC members go for deeper cuts, oil prices could rally. However, if the prisoner’s dilemma prevails, where OPEC majors continue pumping even more to flood the market, prices could tank. Amid such ambivalence, CME’s short dated crude oil options are tailored to manage price risks. Benefits of these short-dated options were described in a paper previously published. This paper posits an options strategy using the weekly crude oil option. OPEC is scheduled to meet on 30th November. A hypothetical trade is illustrated below using options expiring on 1st December. A long strangle involves holding a long-call and a long-put option at different strikes but with the same expiry and underlying. Strangle on crude oil delivers gains when prices swing wildly. However, the strangle loses money if price moves remain muted. Pay-off from this hypothetical options strategy is illustrated below. The long strangle requires USD 2.88/barrel (USD 1.47/barrel for long call at 75.5 and USD 1.41/barrel for long put at 74.5). CME Options Calculator can be used to arrive at the latest premium values at the specified strikes. The overall premium for the strangle represents approximately 3.8% of current oil price at $75 (indicative) and the trade breaks even at expiry when oil is either at $71.62/barrel or $78.38/barrel. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NYMEX:MCL1!
by mintdotfinance
2
$USO high P/L strangle +50% TP with options #oil #usoilI'm trading the pullback of course with neutral strangle. Divergence on RSI, high IVR, optimal for neutral quick trade on micro oil futures. Sold 1 /MCLZ3 MCOZ3 11/15/23 Call 95.00 @ 1.17 (delta21) Sold 1 /MCLZ3 MCOZ3 11/15/23 Put 75.00 @ 1.06 (delta17) This is an OIL 37DTE Strangle for 2.23cr (bit bullish delta overall) 37DTE Strangle for 2.23cr Max Profit: $223 Req. BP: $600 PoP: 74% IVR: 49 (very high, optimal for credit strategy) My target is ~$100 on this trade in the next 2 weeks.
NYMEX:MCL1!
by TanukiTrade
Market Rollercoaster: Harnessing Volatility with StranglesIn this video, titled "Market Rollercoaster: Harnessing Volatility with the Strangle & Iron Condor Combo!", Stock Justice walks viewers through an innovative and potentially profitable trading strategy designed for a highly volatile market environment. This strategy aims to exploit market volatility without being directionally exposed, making it an excellent choice for investors looking for non-directional trading opportunities. Stock Justice starts the video by sharing his observations on the current market scenario, which has been stuck in a range for several weeks. He predicts that the market will soon pick a direction, and timing, as always, will be crucial. He then introduces the viewers to two of his favorite strategies for trading volatile markets - the strangle and the iron condor. For Monday, May 22nd, Stock Justice details his plans for entering a directionally neutral strangle. He talks about scaling into the position slowly to manage risk and ensure optimal entry points. He also warns viewers about the challenges of fighting theta decay, especially as the options expiration date (OPEX) on Friday approaches. The second part of his trading plan involves setting up a directionally neutral long iron condor for Thursday, June 1st. This strategy would achieve maximum profit if either the call debit spread or the put debit spread ends up in the money. Again, he stresses the importance of scaling in slowly to manage risk and optimize entry points. Throughout the video, Stock Justice provides clear instructions on setting profit targets and stop loss areas. He emphasizes that while these strategies can be profitable, they also carry risk, so it's crucial to have a plan for managing potential losses. This trading strategy video offers a comprehensive, engaging, and informative look at how to navigate and profit from a volatile market. Whether you're new to non-directional trading strategies or an experienced trader looking to refine your approach, this video offers valuable insights and actionable advice. Stock Justice concludes the video by reminding viewers that trading, like any other skill, is mastered over time. So while these strategies offer exciting opportunities, it's essential to practice and continually learn to become a better trader.
AMEX:SPY
by StockJustice
TSLA strangle 195c / 85pTrade thesis - theta collection - current IV rank and percentile are at historical highs aggregating past 252 trading days IV rank: 95% IV %: 99% - near delta neutral options strangle position of 195c/85p on Feb 17 monthly expiry - 85p short leg represent a -32% price buffer to the downside - 195c forms a nearly delta neutral trade on call side (+.02 delta) - 56 DTE / ideal duration to sell premium Position - entry: $123.95 - strategy: strangle - structure: short 02/17 195c (.10 delta) short 02/17 75p (.12 delta) - cost: $500 credit - delta: 2.96 - theta: 13.867 - gamma: -0.86 - vega: -18.13 Targets - Profit target: $250 total profit (50% of credit collected) - SL target: -50% loss - management strategy: roll unchallenged side to higher delta to maintain at least .10 delta on each side roll unchallenged side to higher delta (5 strikes) to collect additional credit (10% minimum of roll width) exit position before earnings on 01/25/23
NASDAQ:TSLA
by EqEx
1
Educational Options Video Strangle v Capped Strangle Jade LizardConceptual view of how to trade non directional or semi directionally using strangles and capped strangles, also known as Jade Lizard option spreads. Non directional option trades attempt to benefit from sideways markets or markets where options are are pricing more implied movement than is realized in the underlying asset. Combing a vertical on top with a cash secured put on bottom, creates a range trade. Selling on both sides for credits helps either reduce the cost of buying shares or creates income while the stock trades sideways without direction. DIA SPX QQQ VIX NYSE:PLTR SNAP
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AMEX:DIAEducation
by optionfarmers
9
NVDA Possible Short entry targeting 195 before earning!So many indicators at sell signals - bearish daily candles - bearish RSI and guess what everything looks bearish before earning report which is expected to beat expectation (est. 1.3 eps) . The idea: This is good spot for short entry targeting 195-188-175-165-155 with stops at recent gaps at 258-231 . The expected scenario is to go down to new low for 2022 then strong bounce to 250-280-320. BUT on other side its possible for strong bounce at any moment with long green candle which will award Call options so Strangle here up to earning report will be much appreciated.
NASDAQ:NVDALong
by WinnerTrader99
4