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