Open Positions
Natural Gas Option Writing
Short the October 2019 Natural Gas 2.150 / 1.900 put spread from 50 points or $500 (7/23/19). Spread last at 83 points. Marked-to-market loss of $330. HOLD.
Sold the 2.150 put at 84 points / Bought the 1.900 put on 34 points.
There was a 1-2-3 Bottom Formation in place when the credit put spread was executed. However the market traded down to a new twelve-month contract low on 7/29/19 at 2.223. The market rebounded the next session and then rallied over 100 points. The position was held and the new contract low will act as the price alert to potentially liquidate the position. The risk is defined to $2,000 per spread maximum, though that is if the futures market closes below 1.900 on option expiration which is September 25, 2019. When executed the trend switched to bullish and the skew was towards more expensive puts at this time. There are several resistance levels and Moving Averages above the current market price. Instead of going long calls and having futures run into that resistance, sold puts to collect premium. Option writing has inherent risks so set up a credit spread to reduce the risk and the margin requirements.
Coffee Bull Call Spread
Long the September 2019 Coffee 105.00 / 110.00 call spread on 1.24 points or $465 (6/21/19). Spread last at 13 points. Marked-to-market loss of $416.25. HOLD
Bought the 105.00 call on 330 points / Sold the 110.00 call at 206.
This is the second consecutive Coffee position as each time a bull call spread was initiated to ride the next wave higher. This second position will mostly likely not be profitable as the first position as the option expiration date is August 9, 2019. While the market reached the initial target briefly, the market proceeded to sell-off 10.00 points immediately over the July 4th holiday. Thus the position was held. Risking the full premium of $465 as the potential exit price of a break of the number three point at 96.25 has not been triggered. In fact, if that low does hold a new bull call spread will be initiated using the December contracts to provide more time.
Closed Positions
Gold Put
The long August 2019 Gold 1380 put from 6.6 points (7/09/19) expired worthless for a loss of $660 (7/25/19).
Try Trade Spotlight Suite – for 3 Months
Trade Spotlight Suite – Trial - The Trade Spotlight advisory service consists of three segments covering futures, futures spreads, and commodity options. At the end of each trading day the commodity markets are analyzed by applying our methodology and recommendations are delivered to you based on our trading philosophy. Our technique is to track specific chart patterns for breakouts and apply key technical indicators to confirm the trade setup.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
