I bought calls 2 months ago. The stock rose and I rolled the gains. I am currently out but that is not my brightest thought. The math is still there as FCX rose twice average true range and did that twice. I sigh and realize I have left money on the table.
Tony Zhang notably did exactly the same thing on CNBC Options Action. When asked to comment on Tony's trade Carter Worth stated that at $24 FCX was at an all time high. That was incorrect. Tony suggested to the public to roll the option forward and pyramid the gains. Then the stock marched upward. Now the copper chart and COT data shows a leveling off of the producers commercials. I should sell a put vertical Monday. There is chat from management that the company is not for sale. with the stock in a channel therefore I cannot sell a wasting call vertical - if taken over the stock willjump and I will lose money. If not taken over I can lose on a slide in the price of the common. However the wasting nature of the put credit vertical gives me three ways to win: The stock stays the same for 45 days and the calls erode. The stock fgoes up on the buyout rumor and the puts are worthless and I collect the premium. The stock simply rises on Asian based need for industrial metals (I will watch the EEM ETF).
For those who are new to the COT data it is good to know that we are merely liquidity between the producers of the commodity and the commercial buyers of the commodity. Therefore, I use the data to think about the idea of being long a specific producer of a commodity. Like the copper open interest? buy FCX. Uncover iron ore numbers and rising prices. I buy VALE call options or if the price of the common is in a channel, then I sell a put vertical. Each thought is independent. My point?
Playing the daily game is not for me. I am a little player in between the major producers and buyers. I once was on the floor of a multibillion dollar commodity producer's trading operation. They were selling hog contracts and buying grain futures. They had a commodity to sell and they liked the price. the minions at the computers on the floor were trying to sell without moving down the price too much for beef and buy corn without moving the price up too much. Had I been trading my own account that day against them I would have lost a lot of money as their commodity had been moving up for awhile. But now they were happr with the price realative to the amount of product they had to sll then and where the price might drop to in the future. The firm also made money trading the futures contracts. That is my adversary. It is their game. I just try to use their data and not beat them.
I learned to use the numbers to establish a position based on the general direction (more open interest or less open interest) but playing the game directly is not for me.
Be careful out there. as the adage goes "If you are in a poker game 15 minutes and don't know who the mark is - then it's you.
All the best.
hogs not beef edit brain cramp.