Closed out 3/4 of short LE -Feb/+Apr @ $0.025. Total gain is $1.9250, I am happy with that. I think it was a bigger victory outside of the profit in the sense that I pulled the trigger to buy more when I wanted to pull the trigger to sell. A lesson to myself in letting winners ride and averaging up. Shorting another CL -Jun/+Dec calendar at 1.17. I'll just keep edging into it, keep position size low so I don't lose sleep over it. Idle hands are the devil's workshop kind of trade. Still also holding short CL -Jan/+Feb calendar at 0.10. It hasn't moved much.
Bought a couple 540 March puts on ZW (Wheat). Another short seasonal play, didn't want the exposure to the naked future.. Don't trust the liquidity in YW and don't have the bankroll to play ZW naked (the capital preservation rule). I was also going to spread it but didn't want to limit my upside, so I'm willing to eat some price decay if it moves big.
LE -Feb/+Apr still holding quarter of original position, it came off my sell point by $0.30 so I am temporarily happy from playing it the way I did. A couple CL calendars; shorting the -Jan/+Feb and -Jun/+Dec. I view the Jan/Feb as more of a noise trade just because it tends to go up and down with not a lot of rhyme or reason. The -Jun/+Dec was a play looking for it to go into backwardation again at least once, I figure the market is pretty pessimistic about oil so was looking for the curve to have some downward pressure later into the year. I recently bought some ZW 540 March puts as I mentioned yesterday. They are onside a little bit. I haven't had huge success in the past trading naked options for directionality, fighting the price decay sucks and I think you gotta be a bit lucky to start catching your delta/gamma. We will see how it plays out. Not planning on holding much longer than a week. Updated account performance as of December 3rd, 2014. Made a deposit recently, you can see the big spike in net asset value around beginning of December.
Thanks georgio, I appreciate it! Had a pretty terrible day at work yesterday and was up for about 22 hours. Got even worse when I awoke from my comatose late into the trading day to find that after I had built into my Jun/Dec up to a real position size it had moved against me (offside $0.17 on the spread). I am not worried though, I realize I cannot win everyday and sometimes these things require patience. I still believe in my entry so I will watch and see how its doing by Monday; if I don't like it then I will cut my losses. I am bidding out of my Jan/Feb CL for a tiny profit, I realize it's getting a little too close to expiry for there to be sufficient swings and I don't have the commissions advantage to essentially scalp it. My 540 Wheat Puts are down a little bit; I kind of expected this to happen because it was in a really strong rally when I entered. I still believed in the seasonal tendency for it to drop a little bit this time of year, so I will still hold it for a week or so like I promised myself. Could be a lesson in searching for seasonal setups where the technicals also make sense. The 1/4 size Cattle I have left on the table seems to be hovering about 25 cents below where I got out. No reason to sell it or buy back in yet though; I'd like to keep the margin available for other trades if I see them.
The terrible-ness at work continued. Was up for 36 hours, just woke up from a short sleep. Not in the best state of mind to make any important decisions. Suffered a 8% drawdown on book from Friday's market activity, most of the damage came from the Jun/Dec CL spread; it isn't enough to make me lose faith in the short. I close my Jan/Feb for a small loss (2 cent gross), I realized it wasn't really going anywhere and just using up valuable margin, use it to add a little bit to the Jun/Dec. Wheat Puts are hovering around my entry; from a directional perspective it looks like wheat is just digesting the big rip it experienced recently. We shall see how that goes. The cattle trade is still open at 1/4 original position size. I can't really see what the true quote is at right now because the agri market isn't open yet. Last time I checked on Friday though it was still just hovering around 20 cents off its recent high which is where I sold. May think about closing it just to free up some margin. I am content with my positions at the moment. Not scared enough to lose sleep over them (funny cause I am losing sleep due to my job instead), but still enough to care about them over the weekend. Haha I hope to use this particular last few days to remind myself that I am vulnerable to the limitations of being human. Things will affect my emotional state, psychological state, etc., and hence affect decision making abilities. I will try to keep trading to a minimum when this kinda stuff happens.
I am in the Jun/Dec CL position as well @ 1.49. Just a single contract though for now though, in case things keep moving further into contango.
Just my 2 cents worth on the Jun/Dec CL short. If front month CL continues to plummet as some suggest it will into Q1 2015, this to me implies that increased contango in that spread is more likely than a return to backwardation. I don't know if looking at past ranges of the spread is relevant right now because the fundamental dynamic is different at $65 WTI compared to $80-100 WTI. I think $2-3 contango is a possibility at $65 WTI. As a point of reference to see how much these spreads can move take a look at the Dec 2014-Dec 2015 spread this summer to the time it rolled off. If I remember right, it was something like $9 backwardation this summer and rolled off last month at close to $3 contango. Not exactly range bound and very dependent on flat price movements. Obviously if WTI rallies in the front it's a whole other story and a return to backwardation becomes more likely
Yeah. It isn't a long term hold--I'm just looking to fade it in short term. Wouldn't need it to backwardate to close in the black. I use the term "range bound" relative to how long I plan to hold it haha, so yes if you look at it over the course of several months it certainly isn't range bound.