Matt McKinney's Options & Futures Trading Strategies Blog

Direct: 312-277-0115  |  mmckinney@zaner.com

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Futures, options and forex trading is speculative in nature and involves substantial risk of loss.  These recommendations are a solicitation for entering into derivatives transactions.  All known news and events have already been factored into the price of the underlying derivatives discussed.  From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives.


Crude Options Play: Gasoline Glut Latest Downer In Crude

Posted on 7/25/2016 4:06:54 PM by: Matt McKinney, Market Strategist @ Zaner. 312-277-0115.

Direct-312-277-0115, http://www.mmckinneyfutures.com/

TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.

 

Crude Options Play: Gasoline Glut Latest Downer In Crude

Even Though The EIA Has Oil Supplies Dwindling For Nine Straight Weeks, Gasoline Supplies Are The Highest On Record For This Time.

 

Fundamentally, nine consecutive weeks of lower Crude Oil supplies according to weekly inventory data by the Energy Information Agency or EIA is not enough to prevent the slide in prices. According to the same weekly data Gasoline supplies are the highest on record for this time of year.

Disappointing demand for Unleaded this summer is what the market is focusing on. So much in fact that there is talk according to Hightower commentary that refineries will switch over to Heating Oil one month earlier than usual. Crude bulls better hope for a cold winter, otherwise a month more of Heating Oil probably wont help much.

With full tankers clogging up seaways across the globe, the common theme in the energy sector all the way from the drilling level to the refinery level seems to be production, production, and more production. Turning a Crude Oil glut into a Heating Oil and an Unleaded Gasoline glut wouldn't be surprising, leaving the Crude bears firmly entrenched.

For Zaner Daily Commentary: http://www.zaner.com/offers/?page=16&ap=mmckinne

Technically, on the charts below I have placed my favorite technical indicators. I call this combination of indicators the"10/20/50/BB/ Trend Finder" strategy. They are the10 day Simple Moving Average (SMA, red line), the 20 day Simple Moving Average (SMA, green line), and the 50 day Simple Moving Average (SMA, royal blue line). I have also added the Bollinger Bands (BBs, light blue shaded area) and Candlesticks (red and green bars with the wicks).

 

On the daily chart above the market is n a SUPER TREND down which is the strongest form of a technical trend that my indicators can show me. This occurs when the 10 day SMA crosses down and under the 20 day SMA as both indicators point lower on fairly sharp angles while the market uses the 10 day as its top side resistance.

 

I figured this out by placing my favorite indicators on the charts and studying them which I found at: http://www.markethead.com/2.0/free_trial.asp?ap=mmckinne, which is a web application that we have developed for our clients called MARKETHEAD where I get about80% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 18 years. So if I'm using it then maybe my readers should check it out. Yes?

 

 

Crude Options Play:

A potential strategy here could be to buy Bear Put Spreads and in a 3 to 1 ratio buy a call for a hedge. Another potential strategy could be to sell deep out of the money Calls with a specific exit strategy. For exact details on a potential strategy including risk, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or mmckinney@zaner.com.

CME Options On Futures: The Basics: http://www.zaner.com/offers/?page=9&ap=mmckinne

 

FREE QUOTE- "Opportunity is missed by most people because it's dressed in overalls and looks like work." -Thomas Edison

 

 

FUTURES, OPTIONS AND FOREX TRADING IS SPECULATIVE IN NATURE AND INVOLVES SUBSTANTIAL RISK OF LOSS. THESE RECOMMENDATIONS ARE A SOLICITATION FOR ENTERING INTO DERIVATIVES TRANSACTIONS. ALL KNOWN NEWS AND EVENTS HAVE ALREADY BEEN FACTORED INTO THE PRICE OF THE UNDERLYING DERIVATIVES DISCUSSED. FROM TIME TO TIME PERSONS AFFILIATED WITH ZANER, OR ITS ASSOCIATED COMPANIES, MAY HAVE POSITIONS IN RECOMMENDED AND OTHER DERIVATIVES.

FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON THE UNDERDLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY, OR OUT-OF-THE MONEY OPTION. FURTHERMORE, THE PURCHASER WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION'S STICKE PRICE COMPARES TO THE UNDERLYING FUTURE'S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES MOVE IN TANDEM WITH FUTURES PRICES. IN FACT OPTIONS PRICES MAY ONLY MOVE A LITTLE.

THE LIMITED RISK CHARACTERISTIC OF OPTIONS REFERS TO LONG OPTIONS ONLY AND REFERS TO THE AMOUNT OF THE LOSS, WHICH IS DEFINED AS THE PREMIUM PAID ON THE OPTION(S) PLUS COMMISSIONS.


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