Here is a recap of the “Data Feed Trade” from August 2019.
The “Data Feed Trade” is a strategy to collect premium once a month to offset your monthly exchange data fees. You can read all of the details of this strategy in the following article.
On August 30, the November 2019 Crude Oil futures contract traded as high as 56.46 before selling off over 200 points. An upper trend line held, proving to be a strong resistance level. The contract price remained below the 50-day and 200-day Moving Averages.
Trend and Momentum: Bearish
Market Strategy: Write options to collect premium.
Recommendation: Sell the 61.50 / 63.50 November 2019 call spread to collect $250 in premium. This order was filled on August 30.
The 61.50 strike price was above the summer pivot point high of 60.77 (7/11/19). That strike price ended up in the money when a drone attack in Saudi Arabia over the weekend on September 15 caused the November 2019 futures contract to gap open over roughly 500 points and trade another roughly 350 points higher. The closing price on September 16 was 62.67. As part of the strategy to reduce the risk and margin requirements, the long 63.50 call did its part in minimizing the marked-to market loss. The position was held and the Crude Oil market sold-off the very next session. Following its technical indicators, the sell-off continued. On October 2 the working order to liquidate the position was filled for a net gain of $220. The position was liquidated to cover the gamma risk with over two-weeks remaining until option expiration.
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November 2019 Crude Oil Chart from Bar Chart:
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