QM1! trade ideas
Thursday Forecast Crude!So my target for this week will be the weekly open.
Simple as that sounds we do have some bsl above however Im expecting price to deliver BEARish as per HTF and the rejection for the Daily FVG
Be aware that trading is light we are in the last couple of days of the Month.
Can the HOUSE CAPITALIZE Long above $80.00 Per Barrel...?NYMEX:CL1!
"If you train hard, you'll not only be hard, you'll be hard to beat." -Herschel Walker
Oil has been struggling to Break above $80.00 Per Barrel roughly this whole month of MAY and this week we could actually see buyers gain strength and get over the hump... However that is a long shot prediction! Now if this actually does come to pass then this is what I'll need to see in order to go LONG...
1) Price is currently trading around a 4Hr Supply Zone. ** I want to see buyers push price up N break the supply zone and continue towards the HTF S&R Zone....
2) We have a HTF Descending eR/LQ Trendline that I want to Buyers Breakout N push towards $80.00 Per Barrel... I would like to see a retest of the Failed 4Hr Supply Zone and eR/LQ trendline for buyers to gain more strength for pushing towards our target...
3) Now if we can get the sequence of events to take place that I stated above, Then we will wait for the break above $80.00 Per barrel with confirmed candle closures above price and above the S&R Zone... I want to see confirmed candle closures on the 30m TF N Below to establish conviction in the move from buyers to enter LONG....
4) Now if we can get the Break above $80.00 Per barrel with confirmed candle closures above price and above the S&R Zone then I'll Enter LONG and Target the break of the 4Hr Supply Zone price ($81.10 Per Barrel) 110 pts to be exact in our favor... Ill set my stop just below the S&R Zone EQ Level giving me roughly around a 2.7RR....
Remember when it comes to FRM (Financial Risk Management) our job is to manage the downside costs of printing High side returns of $$$ consistently... Let's Step!!
Stay Focused & Reach Excellence!!
#BHM500K #NewERA #Champions
Can the HOUSE CAPITALIZE Long above $80.00 Per Barrel...?NYMEX:CL1!
"If you train hard, you'll not only be hard, you'll be hard to beat." -Herschel Walker
Oil has been struggling to Break above $80.00 Per Barrel roughly this whole month of MAY and this week we could actually see buyers gain strength and get over the hump... However that is a long shot prediction! Now if this actually does come to pass then this is what I'll need to see in order to go LONG...
1) Price is currently trading around a 4Hr Supply Zone. ** I want to see buyers push price up N break the supply zone and continue towards the HTF S&R Zone....
2) We have a HTF Descending eR/LQ Trendline that I want to Buyers Breakout N push towards $80.00 Per Barrel... I would like to see a retest of the Failed 4Hr Supply Zone and eR/LQ trendline for buyers to gain more strength for pushing towards our target...
3) Now if we can get the sequence of events to take place that I stated above, Then we will wait for the break above $80.00 Per barrel with confirmed candle closures above price and above the S&R Zone... I want to see confirmed candle closures on the 30m TF N Below to establish conviction in the move from buyers to enter LONG....
4) Now if we can get the Break above $80.00 Per barrel with confirmed candle closures above price and above the S&R Zone then I'll Enter LONG and Target the break of the 4Hr Supply Zone price ($81.10 Per Barrel) 110 pts to be exact in our favor... Ill set my stop just below the S&R Zone EQ Level giving me roughly around a 2.7RR....
Remember when it comes to FRM (Financial Risk Management) our job is to manage the downside costs of printing High side returns of $$$ consistently... Let's Step!!
Stay Focused & Reach Excellence!!
#BHM500K #NewERA #Champions
Crude Oil, Not Out of the Woods YetThe chart above references continuous (front-month) Crude Oil, below we are discussing the July contract.
Crude Oil (July)
Yesterday’s close: Settled 79.83, up 2.11
WTI Crude Oil futures cleared the psychological $80 mark, but can it settle above? A major catalyst to start the week was strong travel demand data from the U.S. over the Memorial Day weekend and from China of late. We also believe geopolitical tailwinds are more relevant than headlines may give credit at the moment. Ultimately, weakness last week came on the heels of the White House announcing a release of Gasoline reserves ahead of the weekend and this was quickly shaken off and further helped create a technical bottom at a critical area of support we have been highlighting.
Still, price action is not in the clear, and we find it a good time to monetize some of this move at least if you’ve been able to capitalize as it is testing major three-star resistance at 81.15-81.28, aligning a gap with the 50% retracement back to the April 12th high. Additionally, the 50-day moving average comes in at 80.84.
Bias: Bullish/Neutral
Resistance: 81.15-81.28***, 82.03-82.34***
Pivot: 79.97-80.11***
Support: 79.46-79.61**, 79.01-79.05*, 78.66-78.78***, 77.72-78.05***
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Crude Oil continue with the Uptrend On Crude Oil, it's nice to see a strong buying reaction at the price of 79.85 .
There's a significant accumulation of contracts in this area, indicating strong buyer interest. I believe that buyers who entered at this level will defend their long positions. If the price returns to this area, strong buyers will likely push the market up again.
Strong uptrend and high volume cluster are the main reasons for my decision to go long on this trade.
Happy trading
Dale
Wednesday Forecast Crude OilWe had a very expansive two days From the Bank Holiday Monday and Tuesday.
I do expect the market to slow down a little before we start to move higher to 81.50 as long as price stays above the 1hr fvg and the 1hr +ob my bias will be Bullish.
If we close bellow these pd arrays then a retracement is in order and different targets will have to be looked at.
Pretty simple
CRUDE OIL (CL, USOIL) Weekly Forex Forecast... BULLISH!Looking for price to reach towards 80.11 this week.
2024-05-28 - a daily price action after hour update - oilcomment: In my weekly outlook I wrote that 76 was rejected often enough and bulls are favored to at least test the top of the channel around 78.8. They poked enough today and finally broke above. I expect 84 over the next 1-2 weeks. Measured move would bring us to 84.3.
current market cycle: Bear trend broken - Still inside bigger triangle (form of trading range)
key levels: 76 - 84
bull case: Got my clear confirmation today and will look for long entries over the next days. Bulls probably expect a pull-back to maybe the daily 20ema (79) to form a channel). 1h 20ema is currently holding nicely.
Invalid below 78.4.
bear case: Bears stepped aside since Friday US session and we are in a strong bull trend inside this bigger trading range. Bears will try to sell new highs for small scalps. Best they could hope for is moving sideways around 80.
short term: Up - 84 expected over the next 1-2 weeks.
medium-long term: We are seeing the big triangle playing out between 73 and 86 (could also be 87 but for now I see the spike above 83 as a failed breakout of the triangle. We hit the lower trend line and now we will test back up to above 83.
trade of the day: Just buy anywhere. Look which 20ema is holding and buy near it.
Options Blueprint Series: Pre and Post OPEC+ WTI Options PlaysIntroduction
The world of crude oil trading is significantly influenced by the decisions made by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+. These meetings, which often dictate production levels, can lead to substantial market volatility. Traders and investors closely monitor these events, not only for their immediate impact on oil prices but also for the broader economic implications.
In this article, we explore two sophisticated options strategies designed to capitalize on the volatility surrounding OPEC+ meetings, specifically focusing on WTI Crude Oil Futures Options. We will delve into the double calendar spread, a strategy to exploit the expected rise in implied volatility (IV) before the meeting, and the transition to a long iron condor, which aims to profit from potential post-meeting volatility adjustments.
Understanding the Market Dynamics
OPEC+ meetings are pivotal events in the global oil market, with decisions that can significantly influence crude oil prices. These meetings typically revolve around discussions on production quotas, which directly affect the supply side of the oil market. The anticipation and outcomes of these meetings create a fertile ground for volatility, especially in the days leading up to and immediately following the announcements.
Implied Volatility (IV) Dynamics
Pre-Meeting Volatility: In the days leading up to an OPEC+ meeting, implied volatility (IV) often rises. This increase is driven by market uncertainty and the potential for significant price moves based on the meeting's outcome. Traders buy options to hedge against or speculate on the potential price movements, thereby increasing the demand for options and pushing up IV.
Post-Meeting Volatility: After the meeting, IV can either spike or drop sharply, depending on whether the outcome aligns with market expectations. An unexpected decision can cause a significant IV spike due to the new uncertainty introduced, while a decision in line with expectations can lead to a sharp drop as the uncertainty dissipates.
Strategy 1: Double Calendar Spread
The double calendar spread is a sophisticated options strategy that can potentially take advantage of rising implied volatility (IV) leading up to significant market events, such as the OPEC+ meeting. This strategy involves establishing positions in options with different expiration dates but the same strike price, allowing traders to profit from the increase in IV while managing risk effectively.
Structure
Long Legs: Buy longer-term call and put options.
Short Legs: Sell shorter-term call and put options.
The strategy typically involves setting up two calendar spreads at different strike prices (one higher and one lower), thus the term "double calendar."
Rationale
The rationale behind this strategy is that the longer-term options will experience a greater increase in IV as the event approaches, inflating their premiums more than the shorter-term options. As the short-term options expire, traders can realize a profit from the difference in premiums, assuming IV rises as expected.
Strategy 2: Transition to Long Iron Condor
As the OPEC+ meeting date approaches and the double calendar spread positions reach their peak profitability due to the elevated implied volatility (IV), it becomes strategic to transition into a long iron condor. This shift aims to capitalize on potential volatility changes and capture profits from the expected IV drop.
Structure
Closing the Double Calendar: Close the short-term call and put options from the double calendar spread.
Setting Up the Long Iron Condor: Sell new OTM call and put options with the same expiration date as the long legs of the double calendar spread.
The result is a position where the trader holds long options closer to the money and short options further out, creating a long condor structure.
Rationale
The rationale for transitioning to a long iron condor is to capture profits from a potential decrease in IV after the OPEC+ meeting.
Practical Example
To illustrate the application of the double calendar spread and the transition to a long iron condor, let's walk through a detailed example using hypothetical WTI Crude Oil Futures prices.
Double Calendar Spread Setup
1. Initial Conditions:
Current price of WTI Crude Oil Futures: $77.72 per barrel.
Date: One week before the OPEC+ meeting.
2. Long Legs:
Buy a call option with a strike price of $81, expiring on Jun-7 2024 @ 0.32.
Buy a put option with a strike price of $74, expiring on Jun-7 2024 @ 0.38.
3. Short Legs:
Sell a call option with a strike price of $81, expiring on May-31 2024 @ 0.05.
Sell a put option with a strike price of $74, expiring on May-31 2024 @ 0.09.
Note: We are using the CME Group Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts.
Transition to Long Iron Condor
1. Closing the Double Calendar:
Close the short-term call and put options just before they expire @ 0.01 (assuming they are OTM on Friday May-31, before the market closes for the weekend).
2. Setting Up the Iron Condor:
Sell a call option with a strike price of $82, expiring on Jun-7 2024 @ 0.13.
Sell a put option with a strike price of $73, expiring on Jun-7 2024 @ 0.18.
0.11 and 0.17 are estimated values assuming WTI Crude Oil Futures remains fairly centered around 77.50 and that IV has risen into the OPEC+ meeting weekend.
Transitioning from the Double Calendar to the Long Iron Condor would be done on Friday May-31.
3. Resulting Position:
You now hold a long call at $81, a long put at $74, a short call at $82, and a short put at $73, forming a long iron condor.
The risk of the trade has been reduced by half (assuming the real fills coincide with the estimated values above) from 0.56 to 0.27 = $270 with a potential for reward of up to 0.73 (1 – 0.27) = $730.
This practical example demonstrates how to effectively implement and transition between the double calendar spread and the long iron condor to navigate the volatility surrounding an OPEC+ meeting.
Importance of Risk Management
Effective risk management is crucial when implementing options strategies, particularly around significant market events like the OPEC+ meeting. The volatility and potential for sharp market moves require traders to have robust risk management practices to protect their capital and ensure long-term success.
Avoiding Undefined Risk Exposure
Undefined risk exposure occurs when traders have no clear limit on their potential losses. This can happen with certain options strategies that involve selling naked options. To avoid this, traders should always define their risk by using strategies that have built-in risk limits, such as spreads and condors.
Precise Entries and Exits
Making precise entries and exits is critical in options trading. This involves:
Entering trades at optimal times to maximize potential profits.
Exiting trades at predetermined levels to lock in gains or limit losses.
Adjusting trades based on market conditions and new information.
Additional Risk Management Practices
Diversification: Spread risk across different assets and strategies.
Position Sizing: Allocate only a small percentage of capital to each trade to avoid significant losses from a single position.
Continuous Monitoring: Regularly review and adjust positions as market conditions evolve.
By adhering to these risk management principles, traders can navigate the complexities of the options market and mitigate the risks associated with volatile events like OPEC+ meetings.
Conclusion
Navigating the volatility surrounding significant market events like the OPEC+ meeting requires strategic planning and effective risk management. By implementing the double calendar spread before the meeting, traders can capitalize on the anticipated rise in implied volatility (IV). Transitioning to a long iron condor after the meeting allows traders to benefit from potential post-meeting volatility adjustments or price stabilization.
These strategies, when executed correctly, offer a structured approach to managing market uncertainties and capturing profits from both pre- and post-event volatility. The key lies in precise timing, appropriate strike selection, and diligent risk management practices to protect against adverse market movements.
By understanding and applying these sophisticated options strategies, traders can enhance their ability to navigate the complexities of the crude oil market and leverage the opportunities presented by OPEC+ meetings.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Event-Driven Strategy using WTI Weekly OptionsNYMEX: WTI Futures ( NYMEX:CL1! ) and WTI Weekly Options ( GETTEX:LO5 )
OPEC+, the coalition of the world’s leading oil producers, will convene on June 2nd to decide production policy for the second half of the year. The powerful oil cartel consists of 13 OPEC members and 9 nonmember participants, and together produces about 59% of global oil production. This amounted to 48 million barrels per day (mn b/d) in 2022, estimated by the US Energy Information Administration (EIA).
Many analysts expect OPEC+ to continue the voluntary cut of 2.2 mn b/d, due to expire at the end of June. This voluntary cut, introduced in November 2023, adds to 3.6 mn b/d of production cut that have reduced the members’ crude output by about 5.8 mn b/d, or about 5% of global supply, since November 2022. I consider the move an attempt to shore up prices against higher US oil production and an uncertain economic outlook in China.
OPEC+ meeting is a significant event in the global crude oil market. We could liken its importance to that of the Federal Reserve meetings for equities and bonds. The group’s decision could tilt the balance of supply and demand one way or the other.
Here are three possible outcomes:
• No change: To renew existing cuts of 2.2 mn b/d through the end of the year.
• Additional cuts. This would reduce global crude oil supply.
• Ease of cuts. This would release more oil to the global market.
The oil market may stay calm if the OPEC+ decision conforms to investor expectations of no change. A surprise announcement of additional cuts would likely send oil prices skyrocketing. But any pullback from current cuts could sink oil prices down.
This provides a good setting for event-driven trading strategies.
Monitoring Crude Oil Market Sentiment Real Time
For a trading strategy to work, the trader needs to understand the market sentiment ahead of the actual event. While analysts give out opinions, it is the investors who put money in their mouth. Therefore, for unbiased decision making, we should look into trading data.
The CME Group OPEC Watch Tool is a great analytical tool for crude oil traders. It uses NYMEX WTI crude oil option prices to calculate the probabilities of certain outcomes from the nearest weekly and monthly options that expire around the OPEC meeting. In essence, it uses actual trading data, and go the extra mile to transform it into useful insights. This valuable tool is free and can be accessed via CME Group website.
The title chart includes a snapshot of CME Group OPEC Watch Tool. As of May 26th:
• OPEC Watch Tool expects a 79.1% probability of no change;
• There is a 18.8% probability of ease of cuts:
• Additional cuts remain a remote probability, at 2.2%.
I would like to point out that the market often exhibits overly pessimistic or overly optimistic sentiment. OPEC Watch Tool shows the collective wisdom of crude oil options traders. However, the trades are not scientific forecast. Market sentiment could change very rapidly. With this in mind, we need to closely monitor it with real-time trading data.
If, through independent analysis, a trader establishes an opinion very different to what the market suggested, he or she may express it with a trade position and wait for the market to correct its faulty assumptions.
Trading with NYMEX WTI Weekly Options
We could consolidate the three possible OPEC+ decisions into two:
• Within Expectation. No changes.
• Exceeding Expectation. More cuts or less cuts.
Investors expect OPEC+ to maintain its current cuts. If that turns out to be the case, oil prices may not move much following the announcement.
If a trader hosts this view, how could he or she turn it into a trade strategy? The trader could consider selling short-dated out-of-the-money (OTM) WTI crude oil options.
The July WTI futures contract ($CLN4) settled at $77.80 a barrel last Friday. Selling OTC strikes on WTI weekly options would enable the trader to collect an upfront premium. The first Friday after the OPEC+ announcement is June 7th. The weekly options ($LO1M4) will last only 12 days before its expiration.
How do we select options strikes to sell? There are really no rules of thumbs. For illustration purposes, let us pick an OTC call strike approximately $5 above current market price, and a put strike about $5 below.
• Last Friday, the 82.75 call strike settled at 17 cents. Each WTI weekly option contract has a notional value of 1,000 barrels. Therefore, the trader would collect $170 premium for selling 1 call.
• The $72.75 put strike settled at 29 cents. The trader would get $290 for selling 1 put.
• If the trader sells 1 call and 1 put, he or she could collect $460 for just 12 days.
Words of warning for options sellers:
• CME Group requires options sellers to deposit $6,001 margin for each July contract as the time of writing. Therefore, this strategy requires an investment of $12,002 for both call and put.
• If OPEC+ acts as expected and the oil market stays calm, the trader would get the margin deposit back when the options expire worthless.
• However, if oil prices move up above the call strike, the trader could incur a loss, potentially wiping out all the margin deposit, and probably more.
• If oil prices drop below the put strike, the trader would also experience a loss.
If the trader holds an opposite view, he or she could buy the OTC call or put options, depending on which direction the trader is leaning towards. For a small upfront premium, the trader could establish a position on crude oil, and potentially collect a big payout if OPEC+ changes heart.
For those who are uncertain of which way OPEC+ would go, but are convinced that they would change courses, traders could buy both OTC calls and OTC puts at the same time. This is an example of options strangle strategy.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. 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
Navigating Crude Oil Volatility Around OPEC MeetingsOPEC is a unique organization whose decisions impact national sovereignty, energy security, and most directly on crude oil prices.
OPEC’s decisions have material influence on crude oil prices. All eyes on OPEC+ ministerial meeting taking place virtually now on June 2 (instead of an in-person meeting on June 1 as planned previously). OPEC is widely expected to roll over its production cuts until year-end to support prices until demand improves.
Supply-Demand balance will tilt in the second half of 2024 if OPEC decides to continue its production cuts as the global economy heads into a season of rising demand.
Source: CME Group OPEC+ Watch Tool as of markets on 27th May 2024
CME Group’s OPEC Watch Tool shows a 79.06% probability of the supply cuts remaining unchanged and an 18.79% likelihood of ease in cuts.
Negotiations within OPEC could be challenging as not all members are satisfied with production cuts.
Iraq's oil minister - Hayyan Abdul Ghani - said his country would not agree to another supply cut, as per Bloomberg . Iraq is OPEC's second-largest oil producer after Saudi Arabia.
Iraq and Kazakhstan's repeated breaches of their supply quotas have caused tension within the group. Promises from both countries to compensate for overproduction have not been kept.
Source: OPEC
OPEC+ has cut output by 5.86m bpd, approximately 5.7% of global demand as per Reuters .
The U.S. followed by China and India are the top three consumers of crude oil. US guzzles 20% with China consuming close to 16% of the world’s oil production.
China’s feeble demand has been a significant headwind and remains so despite its stimulus package.
CHINA'S TEPID DEMAND CONTINUES TO WEIGH ON OIL
China is the largest importer of crude oil and its second biggest consumer. Chinese demand for crude remains tepid.
Its economy is showing signs of recovery but remains uneven. Industrial output surpassed analyst expectations , growing by 6.7% YoY in April. Retail sales rose by 2.3% YoY well below analyst forecasts. Sluggish consumer demand impacts oil consumption. April oil imports fell 8.8% MoM to 44.7m tonnes.
In April, China's Manufacturing PMI rose to 51.4 from 51.1 in March, surpassing analyst expectations of 51.0. Services PMI slightly fell in April to 52.5 but remains in expansionary territory of >50.
Source: TradingView
Consumer Confidence Index rose to 89.1 but remains near record bottom levels. It is well below its average of 109.8 as Chinese consumers remain pessimistic due to persisting property crisis.
Source: TradingView
US SPR BEGINS REFILLING BUT WILL NOT MATERIALLY IMPACT OIL PRICES
The US government remains vigilant about gasoline prices in an election year. President Biden's energy advisor, Amos Hochstein, stated that the Strategic Petroleum Reserve (SPR) has enough stockpiles to address any supply concerns.
The Biden administration has been replenishing the SPR after having depleted it by 180 million barrels in 2022. US government bought back 32.3 million barrels at an average price of USD 76.98/barrel throughout 2023 and early 2024.
Having cancelled purchase of three million barrels due to elevated prices, it resumed refilling by looking to buy 3.3 million barrels earlier this month.
NAVIGATING OPEC DECISION IN JUNE
CME Group’s OPEC Watch Tool shows likelihood of different outcomes using WTI Crude Oil option prices. It assigns likelihood to each outcome based on nearest weekly & monthly options.
Probabilities for the June meeting is derived from the Jul 2024 monthly contract (LON4) and the closest active weekly option prices.
Source: CME Group
The market’s assessment of OPEC’s decision changes dynamically. Navigating a constantly shifting volatile landscape requires liquid instruments that are curated for duration risk. The CME WTI Weekly Options do precisely that.
It enables superior risk management to deftly manage short-term price fluctuations with reduced premiums due to short time-to-expiry. Traders can hedge against near-term price volatility stemming from OPEC meetings, EIA reports, geopolitical events, and weather shocks.
CME Group offers Monday, Wednesday, and Friday weekly options, each with four options available at the beginning of the month, in addition to monthly options. As each weekly option expires, new listings are introduced for the following week. These are settled into WTI Crude Oil futures.
HYPOTHETICAL TRADE SETUP
In the lead up to OPEC+ meeting, implied volatility of WTI prices is low but expected to expand closer to date.
Source: CME Group
Crude oil price action will remain muted if OPEC+ decides to extend its current voluntary cuts of 2.2 million bpd. Weekly options can help harvest near-term volatility to benefit from muted price moves using iron butterflies.
The iron butterfly is a limited reward and limited risk options strategy designed to reap gains during times of low-price volatility.
It involves four legs to the trade, namely, (1) One short ATM call option, (2) One short ATM put option, (3) One long out-of-the-money call option, and (4) One long out-of-the-money put option.
Optimal condition for executing iron butterfly is when implied volatility is high while underlying commodity price action is expected to be mild.
Based on 27/May market prices, the hypothetical trade set up using weekly crude oil options expiring on 3rd June 2024 involves (a) Selling 78 ATM Call, (b) Selling 78 Put, (c) Buying 80 Call, and (d) Buying 76 Put.
Source: CME QuikStrike
At expiry, if WTI June crude oil prices settles between USD 76.6 and USD 79.4, this trade would generate a gain of USD 1.4/barrel or USD 1,400/lot using CME WTI Crude Oil options as each lot represents one thousand barrels.
If crude oil prices rally above USD 79.4/barrel, this trade can rake up maximum loss of up to USD 0.87/barrel or USD 870/lot. If oil prices collapse below USD 76.6, then this trade will result in maximum loss of USD 0.87/barrel or USD 870/lot.
Ignoring transaction costs, the iron butterfly exhibits a reward-to-risk ratio of 1.61x with a maximum upside of USD 1,400/lot and maximum loss of USD 870/lot.
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.
Crude**CrudeOil:**
The forecast is for the price to rise to the top of the channel and then reverse the trend and fall to the key level at 72.69.
Oil Daily Charts - Long Trade - Image
I'm looking to take a long here on oil, we have had a good pullback, and I believe we are still in a bullish phase, so I will take a long.
TP and SL are as per the image.
Oil - BUY
Out of Bounds
FTLMA Bands at bottom band
Retrace Over Extended
Double Bounce on Support
Aggressive Entry
Passive Entry
After pull back into Fair Value Gap + Continuation
Nice Order Block Below
Has been pushing down all week really
Could well be heading for that
Lets See : )
CRUDE OIL (CLN2024, USOIL, WTI)... BEARISH!Bias is Bullish.
Daily TF shows 2 weeks of
consolidation supported by a Daily
+FVG. Friday finally saw a "BO" as price
traded through the swing high with
a close above it. Note that price is
now inside the a Daily -FVG.
Potential for a bearish reaction? Yes.
However, I believe it will be short term
if anything.
The 4H gives more detail.
One can see bullish structure in
place that will support a move higher,
potentially to to test 80.21.
Thank you for viewing!
Leave any questions or comments in the comment section.
I appreciate any feedback from my viewers!
Like and/or subscribe if you want more accurate analysis.
Thank you so much!
May profits be upon you.
Friday retracement?? Forecasting.I am looking at crude to make a retracement today after couple days of down movement its been nice but can;t last forever.
So the arrows display where I think price will go today as a first target and second PDL
Keep it real simple on Fridays you got the weekend coming and you don't want to go into it with a loss or a win stay neutral.
Weakness still on in Crudeoil chart..#CRUDEOIL
Weakness still on in Crudeoil chart...
Support area 5800-5750
Charts for Educational purposes only.
Not a Trading Recommendation.
Strictly follow risk reward and stop loss.
Thanks
V Trade Point
Thursday Forecast / Into Next weekNo we have Hit the daily FVG I am looking at the lows off
76.91
76.83
To be taken.
In conjunction with my other forecasts this week of being Daily bias Bearish!!
A Bottom In Crude Oil?Crude Oil (July)
Yesterday’s close: Settled 77.57, down 1.09
WTI Crude Oil futures are showing renewed life this morning, trading nearly 2% from the low through Asia’s open. In fact, commodities broadly were hit sharply during that timeframe. Soft economic data and hawkish Fed speak have been a headwind this week, but less of a draw than expected on yesterday’s weekly EIA inventory report and news that Russia overproduced in April brought additional market pressures.
Have we hit peak pessimism? WTI Crude Oil futures tested and responded to a significant area of support overnight, potentially building out the right shoulder of an inverse head and shoulders going back to May 8th. As today’s session unfolds into the final day of the week, we believe continued price action above our Pivot and point of balance at 78.08, the .382 retracement back to the 80.11 high, will help invite fresh buying.
Bias: Neutral/Bullish
Resistance: 78.33-78.47***, 78.86-79.04***, 79.34**, 80.09-80.11***, 81.28***
Pivot: 78.08
Support: 77.35-77.60***, 76.63-76.82**, 75.70-76.46****, 74.66-74.70**
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
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Crude OilPair : US Oil
Description :
Completed " 12345 " Impulsive Waves
Break of Structure
Head and Shoulder
Bullish Channel as an Corrective Pattern in Short Time Frame
Demand Zone
Elliott Wave Analysis on Oil (CL) Looks for Short Term WeaknessShort Term Elliott Wave in Light Crude Oil (CL) suggests the decline from 4.12.2024 high is in progress as a 5 waves impulse. Down from 4.12.2024 high, wave 1 ended at 81.56 and wave 2 rally ended at 86.28. Wave 3 lower ended at 76.89. The 1 hour chart below shows the starting point from wave 3. Wave 4 bounce unfolded as an expanded Flat structure. Up from wave 3, wave ((a)) ended at 79.96 and wave ((b)) ended at 76.70. Wave ((c)) higher ended at 80.6 which completed wave 4 in higher degree.
Oil has turned lower in wave 5. Down from wave 4, wave (i) ended at 79.17 and wave (ii) ended at 79.85. Down from there, wave i ended at 78.08 and wave ii ended at 79.5. Expect wave iii to end soon, then it should see 2 more lows to end wave (v) of ((i)). Afterwards, it should rally in wave ((ii)) to correct cycle from 5.20.2024 high in 3, 7, or 11 swing before it resumes lower again. Near term, as far as pivot at 80.6 high stays intact, expect rally to fail in 3, 7, or 11 swing for further downside.
