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Trade Spotlight: Options (October Monthly Summary)

This is the October 2019 Monthly Recap of the Trade Spotlight: Options advisory segment.

Open Positions

Sugar Call (8/26/19)

Long the March 2020 Sugar 13.25 call option on 45 points or $504. Option settled at 25 points. Marked-to-market loss of $224. HOLD.

The first price alert to potentially liquidate on a close below the 50-day Moving Average (12.51 at the time) was dismissed based on favorable indicators. The March 2020 Sugar futures contract is now setup in a 1-2-3 Bottom Formation. The number three point is the recent session low at 12.05 (10/23/19). Along with the twelve month contract low (11.74, 9/12/19), these points set up a new lower trend line. The potential exit is a close below that trend line (12.10). The upside target remains the 13.00 price level, however if that is broken than the 200-day Moving Average at 13.25 is the target. Option expiration is 2/17/20.

Nasdaq Bear Put Spread (9/23/19)

Long the December 2019 mini Nasdaq 7800 /  7700 put spread on 36.0 points or $720. Spread settled at 16.0 points. Marked-to-market loss of $400. LIQUIDATE.

A put spread was initiated on the breakout of the Inverted Head & Shoulders Formation. The market has recently broke above the Head of the formation, that is the exit point. The option expiration date is December 20, 2019 so let’s liquidate the position to take back premium before time decay take over.

Natural Gas Credit Put Spread (10/15/19)

Short the January 2020 Natural Gas 2.400 / 2.200 put spread at 65 points or $650 (10/15/19). Spread last at 28 points. Marked-to-market gain of $380. HOLD.

In mid-September the Natural Gas futures contract found support and setup a Double Bottom Formation. Sold put options to collect premium below the contract lows while the market was trading within a range in mid-October. Since then the futures contract broke out of that range to the upside. The options expire December 26. Will liquidate position to cover gamma risk if value continues to fall.

Closed Positions

Heating Oil Bull Call Spread (8/21/19)

The long November 2019 Heating Oil 1.95 / 2.00 call spread from 165 points or $693 expired half in-the-money. The net loss on the trade was $197.48. Better than the maximum loss of $693 on the spread.

First, the working order to liquidate the spread at 330 points or $1,386 for a profit was nearly missed but never filled. The working order and position was held to option expiration which was October 28. The 1.9500 call expired in the money and was exercised. Liquidated the futures position immediately in the futures market at 1.9618 for a profit of $495.60. The long option premium on the 1.9500 call of $2,066.48 is forfeited at option expiration. The short option premium of the 2.000 call of $1,373.40 was collected.

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the “risk disclosure” webpage accessed at at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

About Don DeBartolo

Don C. DeBartolo is a Series 3 licensed broker registered with the National Futures Association (NFA). As a former arbitrage clerk in the S&P 500 futures pit at the Chicago Mercantile Exchange (CME), Don has floor trading experience. Taking his trade execution expertise and ability to navigate a fast-paced environment, Don transitioned to the brokerage side of the business. Since 2005, he has worked at Daniels Trading, a brokerage firm in the heart of the financial district in Chicago. His responsibilities as a broker include providing market analysis, trade execution, and money management to his clients around the world. In March 2010, he developed a formal trade advisory for clients of the firm seeking specific trade recommendations and subsequent risk management.

Due to his widespread proficiency and experience with the futures and commodity options markets, he is able to offer his clients timely insight, specialized trade recommendations, and educational information through various videos and writings.

Studying at Loyola University Chicago, Don discovered the international sport of rugby. Still today, he plays for the Chicago Griffins, a member of the highest league of rugby competition in the United States. Skill and discipline are two traits that carry over from the pitch to the trading screens.

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