Oil is in the middle of a Correction. I still expect it to go down lower, but until then we can still trade it. My favorite strategy in this cases is to use a In the money Ratio Spread using December options (Buying one $51.5 Put and selling 2 $47 puts for a total credit). If it breaks to the upside, there is no risk, and if it goes down then I will short the Future contract. Our break even is at $42.22 so as long as it stays over it we are making money. Maximum profit is $4,780 per contract and I will look to close it early to improve the probabilities.
Added a Short on the Futures at 45.5 after news to protect the trade to the downside.
Ok, so the news tagged our entry to short and then it reversed. I Closed the Future contract with a loss when we broke the trend line and sold 2 Puts at 44.5 to get what I lost back.
Trade Enhancement. Sold the $52 Calls making now a strangle between our 44.50 Puts. I think we are about to make a correction and even go higher, now our break evens are $52.57 and $42.82 on the down side.