Crude Oil is at a major resistance. We are going to take an aggressive option trade on it. Notice, I said aggressive. We are going to do a “unbalanced butterfly” strategy for 0.10. It may not fill but that is all we are willing to risk.
In the strategy, we are going to risk $100/contract to try to make min. of $400 by option expiry in September. If we get to 250% before option expiry, we will take it off.
Here is the risk graph for the “unbalanced butterfly”.
Here is the Ichimoku weekly chart for Crude Oil futures:
If you want a less risk trade, you can look at buying a put on the Oil ETF USO for $74/contract. If every dollar move, you will make or loss $23.46/contract. Based on technical analysis, we are looking for price to get to 32.18 if the resistance holds. Here is the risk graph for this trade:
EDUCATIONAL USE. Commodity Futures Trading Comission, Forex, Futures, Equity and options trading has large potential rewards, but also large potential risk and may not be suitable for everyone. You must be aware of the risks and be willing to accept them in order to invest in these markets. Do not trade with money you can not afford to lose. This is neither a solicitation nor an offer to Buy/Sell. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this document. The past performance of any trading system or methodology is not necessarily indicative of future results. All information provided on the Blog is for educational purpose
