BTU is down 10% today, following a ~5% slide in WTI, pushing the U.S. crude benchmark to $50, and a 6% decline in Brent, which is down to $53. With today's drop, BTU has fallen 65% since the beginning of 2014.
I like the odds of a rally here, with BTU's extremely oversold levels, nearby TL support, bullish RSI divergence since October and the psychological support level of $50 Brent. Took this trade by picking up some Mar '15 $7 calls trading for $0.85 per contract and Jun '15 $7 calls trading for $1.24 per contract. Given today's drop from $7.74 to $6.97, these contracts look very cheap.
1.5.15 - 2:06pm EST
Comments
DavideG
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Strong rally in last week, and up more than 13% since post. Sold March contracts for $1.15 to manage time risk ($0.85 cost basis). 2.9.15 - 2:43pm EST.