"Wee" Willie Keeler played baseball for the New York Giants from 1892 to 1910. At 5'4" and 140 pounds, he was the smallest player ever in the major leagues. The bat he used was only 30 inches long and weighed 29 ounces. Similar size and weight as an eight year old boy's little league bat.
Amazingly he had a streak of eight seasons with 200 or more hits, matched only in later years by Pete Rose. When asked how he was able to accomplish this achievement Mr. Keeler stated, "I keep my eyes clear and hit 'em where they ain't." Successful energy option sellers strictly adhere to the same philosophy.
When selling energy options knowing where the underlying commodity price is going has value. Knowing whether the market is trending or range bound will help to gain a little extra premium on the sale. Vitally important, however, is knowing where the price is definitely not going.
Just as "Wee" Willie would scan the field to see where the opposing players were positioned, so too energy option sellers need to understand historical and seasonal price tendencies to have a high level of confidence that the sold option will expire unexercised and maximum profitability on the trade will be obtained.
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