krugman25
Long

OIL /CL USO - Short Premium - Short put into high IV for $$$

NYMEX:CL1!   Light Crude Oil Futures
The 1 year IVR in USO has reached 93%, and has reach 100% on the 90 day IVR . This is exactly when we want to begin selling premium. In this case I decided not to sell a straddle(selling both a put and a call), because I don't like the upside risk I would be taking on. With this trade, selling a put, we are both selling premium and getting directional.

Technically I like this trade because price is reaching a key support of $66.30 where I think oil could find a floor and even pop a bit higher from here as bulls begin stepping in.

The specific trade I took was the short put @ 61.50 w/ 30 DTE . It has a 15 delta (85% chance of full profitability), with a break even of $61. Oil would have to fall another 10% in the next 30 days just to hit break even, so I like the odds.
Trade active: Short put @ 61.50 w/ 45 dte. Oil was at $67.30 at the time.
Comment: 30 DTE, not 45
Comment: Wow, that was fast. 25% of profit has already come on of this trade in just a few hours. I am thinking about whether to roll the put up to get more directional. I will provide an update this evening.
Trade active: I had already pulled about 65% of the profit out of my 71 strike naked put so I rolled it up to 74 strike, which gave me another $260 in premium and bumped my delta back up to 17.
Trade closed manually: Put in a close order for my short put. Daily bearish pinbar formed and will close my put, wait for a drop into the 64-66 area and consider a new short position.

Comments

nice
+1 Reply
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