Today’s futures movement featured a nice rally in gold which brought its Relative Strength into the mid 70’s range. As discussed Friday, if you have a directional trading bias and want to establish an options position, I would recommend a vega neutral spread rather than an outright purchase. Cotton rallied to a high of 87.71 before pulling back to close near the lows of the day. Crude Oil continued its downward spiral with the October contract closing down 278 points at 71.92. The January contract closed down 194 points at 76.19. The October/January spread is now 427 points. The movement of this spread has been enormous and provides some interesting opportunities for traders who think that they may have missed the move down. By using the January options skew and the relationship between the months, there may be an opportunity to get short using options spreads. I would welcome the opportunity to discuss my ideas with you. The Chart below highlights Tuesday’s essential information.
Each day I review the information provided below and analyze the options settlements to help determine the appropriate strategies for establishing positions. A risk/reward analysis should always be considered before initiating positions. I can be reached at 212-383-9453 or at fred.oltarsh@libanman.com for a no obligation discussion about position ideas. If you’re trading the S&P, Coffee or Crude Oil, I have options trading suggestions which, due to the nature of the options skew, might mesh nicely with your trading opinions.
The chart represents some useful information pertaining to tonight’s settlement prices. Most of the columns are self explanatory but hereis the key to the lesser known columns: RSI is the Relative Strength Index and measures a market’s overbought or oversold status. Anumber greater than 70-80 would be considered potentially overbought while a number below 30-20 might be considered oversold. The 10 and 30 HV are the 10 and 30 day Historical Volatility for the Commodity. IV refers to the Implied Volatility of the At-The-Money Option. The ATR and $-ATR refers to the 20-day Average Trading Range of the Futures Contract and the Dollar Range for the Contract . Much of this information is a simple way of analyzing Implied and Historical Volatility and is a concise review of the markets.For help interpreting the numbers or understanding how this type of analysis will help your trading call us at 212-383-9453.
FUTURES AND OPTIONS TRADING INVOLVES SIGNIFICANT RISK AND IS NOT SUITABLE FOR EVERY INVESTOR. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE, BUT IS IN NO WAY GUARANTEED. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS.
