Crude Oil

I have never said I had a position on HO K/N. It was merely an observation of yesterday's action. HO spreads were the only ones not moving.

 

Meant no offense. Lots of opportunities in the CL and RB spreads.

 

Oil Waivers

The U.S. will not renew waivers it granted last year to certain buyers of Iranian crude, such as China and India. From May 1, any buyers of Iranian oil—some of whom were reportedly expecting waiver renewals—will face sanctions. Monday's announcement by the Trump administration sent crude prices to their highest level in six months. Reuters

 

close remaining 20%) Long 62.82 uptrend from December broken today
prev. Long (80%) closed 59.72
OUT 100% now. Sidelines, waiting to go Short.

 

Island reversal today?

 

Does anyone know who owns the oil held in commercial reserves in the US, is it the refiners or producers or exchanges or another entity?

 

Short 63.52 stop 66.17

 

Hi Guys, a question for profs?

In case you are willing to protect an cl spread against a huge movement in the market, in this case imagine you are willing to short same crude oil Spreads, let me say CLMZ20 Jun Dic 20, buy you say, because the market is so volatile and you are willing to sleep well, one decide to hace same insurance and the insurance in this case can be:

Call Option, buy a OTM call Option in Dic 19 ?
Put Option, sell same puts ? You are willing to protect from an upside movement?
Or other idea?

My question is how many puts/ call per each spread? How can we calculate the delta of the spread to have an idea for the options?

How does all the big spread traders take same coverage in this spreads!!!!

Thanks a lot

Greg

 

Great question Greg, thanks.

I will approach your question from a speculative risk vs reward standpoint - not from the view of a commercial hedger. I would rather construct another spread narrative using futures in that particular sector of the forward curve with a more subtle modeled trading range and volatility. I would not use options to hedge, simply because it leaves "no meat on the bone" in terms of profit potential.

Here are some thoughts:

The aforementioned CLM20 vs Z20 spread you suggest with a very serious 320 tic trading range:



The more subtle but still chunky CLMNQU20 Condor (110 tic trading range), where you buy or sell the wing months:



And, the relatively sublime CLMUZ20 Butterfly (35 tic trading range), where again you buy or sell the wing months:



There are many other possible spread constructs, but as you can see you have a great deal of versatility in terms of finding a spread combination that agrees with your own personal risk tolerance profile.

 

Ok thanks, this is the basic idea, and is what I do, spreads, flys, and same time condors. But I would like to consider other options.

In my experience is a huge cost to cover spreads with options, and seeing what you say and considering your experience well above mine.. is good to know option is not the right way...

Thanks