Trading advice from legendary guitarist Ted Nugent, "I got you in a stranglehold baby..." Not a bad strategy for this market Ted.
For the past year crude has been stuck in a $65 to $84 trading range. Not an easy task to make money consistently in this continuous chop fest. Algorithmic program trading set to tight take profit and stop loss zones, keeps the price wave action tumultuous.
Strangling the market is simply selling same month crude option out of the money calls and out of the money puts simultaneously. Setting strike prices above and below the $19 trading range and moving out several months on the expiration, has been an excellent low risk revenue generating strategy.
With expectations of continuing slow but steady worldwide economic growth, there is really no fundamental or technical reason not to roll over these strangles for the coming year. Watch those parameters closely. If the market breaks to the upside or downside of the past year's trading range, volume will pick up dramatically as traders position for a new trend.
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