Crude oil (WTI) : good time for a turn up.Would not be surprised to see a good bounce from here. Looking for price action to confirm.
Have a great weekend. Stay well.
USO
TRADE IDEA: USO OCTOBER 16TH 2 X 2/MAY 15TH 5 CALL RATIO SPREADPictured here is a bullish assumption diagonalized call ratio spread with two times the number of long calls at the 90 delta strike in October as the number of calls in the front month with a 4.45 break even versus 4.47 spot. As of Friday close, it's priced at a 4.89 debit and had delta/theta metrics of 134.84/.45.
I generally visualize this setup in two, separate pieces -- one consisting of a long call diagonal and the other, a standalone long.
Assuming price breaks the short call running into expiry (and stays there), the long call diagonal consisting of one long call and the front month short will converge on max profit. This will be the difference between the width of the spread (3.00) and what it cost to put on one long call leg and the short call (2.17) or .83 ($83), at or near which that aspect should be stripped off.
The remaining call is then left to ride alone as synthetic stock to be taken off in profit, potentially targeting the $8-10/share, making a 5.25-7.25 profit on the standalone long conceivable.
In the event price doesn't clear the short call toward expiry, the short call aspect is rolled out to reduce cost basis further.
USOIL - Channel breakout planWith Saudi and Russia oil war still looming, we should still feel pressure on oil prices. We expect price to play within our rising channel and break at least towards 22.00s.
Supply shock / weak dollar/ technicalsThere’s a huge supply scare approaching our shores, but I think it’s priced in at this point. We got the news March 8th and the markets made there moves. Shutdowns were announced a week later and market dipped lower. We are now talking about reopening... Plus a weakening dollar. Oil industries reducing capex across board. This is all adding up to be a slow accumulation opportunity for big money.
Oil bottom at $17?Good morning traders ☕
Updated #Elliottwave counts on our Discord platform:
#BTC, #XRP, #LTC, #SPX, #NDX, #Oil…
Is the #WTI going to bottom at $17?
Happy trading! 🏄
THE WEEK AHEAD: A PREMIUM RICH MARKETOPTIONS LIQUID EARNINGS ANNOUNCEMENTS:
MU (77/112)
NKE (74/103)
EXCHANGE-TRADED FUNDS ORDERED BY IMPLIED VOLATILITY RANK:
EWZ (91/132)
USO (89/210)
XLU (84/76)
GDXJ (82/141)
XLE (77/109)
EWW (76/105)
SMH (73/105)
TLT (71/47)
XOP (63/154)
SLV (73/79)
GLD (63/37)
FXI (61/63)
GDX (57/106)
BROAD MARKET ORDERED BY IMPLIED VOLATILITY RANK:
IWM (76/71)
EEM (74/73)
SPY (73/66)
QQQ (73/60)
EFA (54/53)
VIX/VIX DERIVATIVES
VIX: 66.04
/VX APRIL: 62.00
/VX MAY: 56.95
/VX JUNE: 49.95
MUSINGS:
On Margin:
As you can see by the chart showing the top five or so exchange-traded funds having the highest implied volatility ranks, this is largely a closely correlated sell-off. Because of this, I'm somewhat hesitant to pile into a bunch of nondirectional stuff simultaneously, if at all. If we get relief from the selling, these very same instruments could whip back to the call side in closely correlated fashion, leaving me with a bunch of tested call side; whereas now I'm just put side tested (and how). Naturally, this means I have to put up with being far more directional than I would ordinarily be, but these things happen and being patient and mechanical with how you manage current positions will be more productive in the long-term than going bonkers here and bailing out of everything in panic.
Unfortunately, this likely means that I will be taking on far more shares of stock than I ordinarily like to hold on margin and then reducing cost basis over time via covered call. I'm always prepared for that, but being in stock on margin isn't buying power efficient, although you always have to plan somewhat for that possibility and go with the flow if taking on shares is really the best way to work yourself out of the trade.
In The IRA:
As pure luck would have it, leaving my SPY position monied throughout this nonsense (as well as erecting some additional call diagonals at market highs as delta cutters) has served me well. This wasn't particularly prescient or a stroke of genius; I was just doing what I felt I had to do to protect the largest element of my retirement portfolio at a point at which it made the most sense to do that and nothing else. Anyone else who did that and got lucky isn't a guru. No one saw this crap coming, and if they're saying they're a genius, well, I say you're free to call bullshit.
Is this an opportunity to pick up things on your shopping list? Maybe. I've taken this opportunity to ladder some out-of-the-money short puts out in a few things that I've had on that list for ages -- XLU, IYR, EFA, and HYG; all dividend generators which have been just far too pricey to deploy the frustratingly large bit of dry powder I've had sitting on the sidelines for ages as the market inexplicably ground up to more and more ridiculous valuations. Will I get in at the best possible prices? The jury's out. I will be getting in far lower than at the market highs we saw just a few weeks ago (assuming price stays below the rungs of my ladders) and won't let anyone talk me out of the proposition that lower is always better in your retirement account even if I don't hit the lows perfectly.
The basic strategy here, after all, isn't largely about share price; it's about assembling a portfolio that will pay out dividends regardless of growth and in which you can reduce cost basis over time via short call. It's three-legged: dividends, short call premium, and (if it happens) growth. If the grand arc of time has taught us anything, it's that growth may be an "average given" over the entire life of the market, but may not be over shorter time frames.
10 dollar swings at 20 year lows I'm seeing 10 dollar jumps in oil off this trendline- Clearly it's volatile and scary to trade right now. The media is scaring everyone shitless with no where to hide, but we have a bottom coming. I'm not sure we will touch the lower trendline, but if we do expect another 10 dollar pop, if not higher. Resistance is at 40 and I expect to see reached whenever equities catch a breath.
OIL yes$uso $usoil $dwt $uwt $gush
If you're selling, someone is buying. Buy fear, sell/short greed. This is fear and capitulation. Consider where oil is historically and aim big. I've been waiting on this move for years.
XLE IS THE PLACE FOR MEBuy cheap. Sell expensive. Buy fear. Sell/short greed. I don't have an established trend here but I like energy long term. Now let's hope that ETF's don't collapse.
𝗖𝗿𝘂𝗱𝗲 𝗨𝗽𝗱𝗮𝘁𝗲: $CL_F Daily. Break of 42 was NO joke ..Needs to bounce here soon otherwise may go straight to 17-18 area
Crude Oil- Next major support levels a long way down! With US and Saudi Arabian cooperation, likely Crude oil will be taken to approx. USD$10.50/brl. The Saudi's can produced for US$7-8/brl. Higher political agenda, means it will be pedal to the metal for Saudi Arabia (13 million brl output maximum from April), to eliminate Iran once and for all.
WTI RepostLooks like I didn't have US futures on my WTI post. I think this is the right one, at least it's updating the price.
I usually don;t use this site for oil futures, so excuse my goof up.
In any case, it's bouncing back up..... but still down big.
The question is when do we buy? Will it hit $26 support from 2016?
2014-15 period as a guide to current environment2014-15 vs today
Seeing the first impact from virus and oil shocks now
If it plays like 2014 we can see a bounce in risk assets soon BUT the worst will come later in a few months
THE WEEK AHEAD: ADBE, ORCL EARNINGS; GDX/GDXJ, USO/XOP/XLE, EWZEARNINGS:
ADBE (89/65) and ORCL (77/60) both announce earnings on Thursday after market close and have the metrics I look for in earnings-related volatility contraction plays (>70% rank; >50% 30-day implied).
Pictured here: a short strangle paying 11.65 at the mid price camped out around the 16 delta. Its defined risk counterpart: the 265/275/395/405 ten-wide iron condor pays 2.46. Off hours markets are showing wide, so look to price setups out during the regular session.
The delta neutral ORCL April 17th 40/55 short strangle pays 1.45.
EXCHANGE-TRADED FUNDS WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS >10% OF THE STOCK PRICE:
GDX (99/51), April
USO (97/66), April
GDXJ (96/58), April
XLE (97/75), April
EWZ (92/52), April
XOP (92/51), April
TLT (91/41), May
EWW (91/48), April
XLU (90/43), June
SMH (84/56), April
FXI (65/33), June
BROAD MARKET WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS >10% OF THE STOCK PRICE:
EFA (87/37), June
QQQ (83/43), April
IWM (82/46), May
SPY (78/41), May
EEM (70/37), June
FUTURES:
/CL (97/65)
/GC (84/25)
/SI (70/30)
/NG (65/48)
/ZS (30/19)
/ZC (21/22)
/ZW (13/27)
VIX/VIX DERIVATIVES:
VIX finished the week at 41.94, so it has been a rough ride for shorters who were in plays before this volatility expansion (points to self). The basic watch word is "patience"; volatility will abate at some point in time ... .
The CHK perspectiveI like Chesapeake energy for the longer term investment. Energy has been lagging compared to other sectors over the last few years and there is tremendous potential in good energy companies. CHK is historically cheap and could do very well if energy takes off. However, I suspect more pain ahead for oil with the potential for an enormous flush.. perhaps below 2016 levels.. Regardless of that, I think oil goes bonkers high over the next 6-7 years. I'm looking at holding some longer term USO call options (if we see a deep oil flush) as well as a few good oil/energy companies.. CHK is one of those in my opinion. CHK could disappear.. there's always risk in investing but I'm accumulating shares of CHK sub .48 but I wouldn't be surprised to see .20 either. We have some chart history that demonstrates these exact type of moves- From current levels, a $20/share run would equate to a 45x (4500%).. a move back to the 2008 ($69 per share) high would be 16000+% (160x). It can go to $70+ or it can go to 0.. This is a long term trade that has some risks so I'm only willing to put in what I'm willing to lose.
CRC on fire. Will see 11 soonBuy with all hands. ER coming and huge debt restructure happened today. Good volume. This is $30 stock but being resonable and targeting 11-12 near term
Crude/oil going further down"Oil prices plunged to one-year lows, with WTI back below $50 for the first time since Jan 2019 as global demand concerns trumped OPEC+ jawboning that they could do something to stall the decline."
Due to weak oil demand from china with the aftereffect of the corona virus.
We could see oil go down further as this is just the beginning of the outbreak.
Opec said they will try to stop it but if anything, we will use the previous support as the new resistance.
Short position
Entry $50.60
Target $42
Stoploss $51.60
THE WEEK AHEAD: DBX, TECK EARNINGS; USO, GDXJ; VIX, VXX, UVXYEARNINGS:
The earnings that are best metrically for earnings-related volatility contraction plays are DISH (87/59), TECK (87/52), and DBX (82/57). Unfortunately, strike availability in DISH is limited to two-and-a-half wides, making it an unattractive play given its stock price (39.97 as of Friday close).
Pictured here is a DBX (82/57) skinny short strangle in the March cycle paying 1.98 on a buying power effect of about 3.25 (60.9%), break evens wide of the expected move, and delta/theta of 3.32/-7.44. Given its near-straddle narrowness, I would look to take profit at 25% max. Announcing on Thursday after market close, look to put on something in the waning hours of Thursday's session.
The other one of interest is also small: TECK (87/52), which finished the week at 13.46. A play similar to that in DBX -- a March 20th 13/14 skinny short strangle -- pays 1.15 at the mid price on a buying power effect of about 2.25 (51.1%) with break evens greater than the expected move and delta/theta metrics of -4.21/2.17. As with the DBX skinny, look to take profit at 25% max.
EXCHANGE-TRADED FUNDS WITH EXPIRY IN WHICH AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE:
XLE (46/20), July
USO (42/35), April
FXI (35/21), August
XOP (34/34), June
XBI (34/27), June
SMH (30/25), June
EWZ (14/25), June
GDXJ (5/28), May
GDX (4/23), June
The paying plays of shortest duration are in USO (April) and GDXJ (May). Take your pick in June between XOP, XBI, SMH, and EWZ.
BROAD MARKET FUNDS WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE:
EEM (38/12), December
QQQ (26/18), September
EEM (23/18), September
IWM (19/16), October
SPY (16/13), November
FUTURES (EXCLUDING CURRENCY/TREASURIES):
/NG (52/39)
/CL (41/35)
/GC (26/11)
/ZS (23/17)
/ZW (20/21)
/ZC (16/14)
/ES (16/14)
/SI (5/24)
VIX/VIX DERIVATIVES:
VIX finished the week at 13.68, so there are probably some happy campers out there who shorted the January-end volatility pop to nearly 20. The March, April, and May /VX contracts are trading at 15.40, 16.11, and 16.30, respectively. I could see going small with an April term structure trade if you haven't already got one on, but May isn't going for a ginormous premium over April, so there probably isn't much benefit to going out farther in time: the April 16/18 is paying .60 at the mid with a break even of 16.60 versus the /VX contract of 16.11; the May 16/20, virtually the same price.
With the VXX short call verticals I already have on, I'm basically looking for a VIX low (it was around 12) to consider pulling some units off in profit. On the other end of the stick, I'm waiting for another pop in VIX to potentially add. VIX at 20 is a nice place to look to do that ... .
