fuzzballl 10:46 am on Friday, May 5, 2017

/CL and summer demand

My first foray into crude futures so staying low risk. If we get a pop it’s a decent profit. If she tanks (doesn’t matter how low it goes) I’ll be long one dollar below where it’s trading in August. Pretty decent call premium for selling covered when (if) I get assigned.

SOLD /CL AUG 17 48/46 BULL PUT SPREAD @ 1.00

walter6871 12:23 pm on Friday, May 5, 2017

curious..at what price did you but a 1 lot of /cl ?
So come AUG exp if /cl is above 48, 1k if below btc @1.00?
thanks
- fuzzballl 12:37 pm on Friday, May 5, 2017
  
  Didn’t buy anything. Sold the put spread and brought in one point ($1000). If it goes up I keep the grand and position goes away…just like stock.
  
  If it tanks (say crude oil is 25 bucks) at expiration. I’ll close the long put for a gain and take assignment on the short put or roll it out. Since I’m not sure if a put assignment of an Aug contract will get me long a Sep contract, what I might have to do is late in the day just before expiration, just buy the next month’s contract and let the Aug expire.
  
  The real point is, selling ITM spreads, if you close the long side and take assignment of the short side your basis should be no worse than the width of the spread minus premium received. I do this all the time on regular stocks when I have a directional bias.
- fuzzballl 12:45 pm on Friday, May 5, 2017
  
  Main thing is is to do something so the crude oil delivery guy doesn’t show up at your front door…LOL!
  - walter6871 1:09 pm on Friday, May 5, 2017
    
    nope do not want that delivery/lol
    on above you said selling covered so just trying to figure it out.
    /CL says a tic = .01 = $10.00 = $2970.00 margin.
    I am un knowing about that part which makes me believe it is not just like regular stock.
    Maybe someone could take my fear away.
    Just got approved for futures and so want to dip a toe.
    - fuzzballl 1:20 pm on Friday, May 5, 2017
      
      That 2970 margin number is probably pretty close depending on broker. That number will stay pretty steady. The big difference is your account will be marked to market each day (debited or credited) at the rate of 1000 dollars per point for /CL. This amount varies by instrument.
      
      That’s why I initially started with a put spread to minimize daily movement. It will get me long safely on a big dump or make nice cash on a recovery while only tying up 400 bucks in margin.
      - walter6871 1:27 pm on Friday, May 5, 2017
        
        Guess I am freaking out if .01 = 10.00. Then 1 contract = 10 * 100 = 1000.00 ……oh never mind. I guess that is the most you could win or lose.
        Why don’t we do these every day.?