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).
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This material is conveyed as a solicitation for entering into a derivatives transaction.
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