Updates on Crude Oil and Brazil Option Trades

  • SumoMe

A lesson in options trading today.  If you are not an “options guy (or gal)” – er, wait, political correctness requires me to restate that – If you are not an “options person”, (phew, that was close) then class is dismissed.  Unless of course you would like to know something more about how to make money when a security remains unchanged or moves only slightly against you.  In which case, read on.

Update #1: Crude Oil (Ticker USO)

On 9/30/2015 I wrote this article detailing a hypothetical trade using call options on ticker USO – an ETF that is intended to track the price of crude oil.

After that date USO rallied pretty sharply for about a week – $14.68 to $16.20.  Since then the bottom has pretty much dropped out again nd as of the close on 11/12 USO was trading at $13.35.  As you can see in Figures 1 and 2 it is time to close this trade as both options have essentially no value left and the maximum profit target has been reached.

1Figure 1 – USO Nov 17-16 Bear Call Spread (Courtesy www.OptionsAnalysis.com)

2Figure 2 – USO Nov 17-16 Bear Call Spread Risk Curves (Courtesy www.OptionsAnalysis.com)

Update #2: Brazil Stock Market (Ticker EWZ)

On 10/27/2015 I wrote this article detailing an “iron condor” spread using options on ticker EWZ that tracks an index of stocks in Brazil.   3Figure 3 – EWZ Nov 19-20-26-27 Iron Condor (Courtesy www.OptionsAnalysis.com)

4Figure 4 – EWZ Nov 19-20-26-27 Iron Condor Risk Curves (Courtesy www.OptionsAnalysis.com)

With 8 days left until November expiration this trade has an open profit of $270 (out of a maximum of $510).  As of the close on 11/12 EWZ was trading at $23.69 with breakeven points of $26.17 and $19.83.

Nothing to do here but “sit and wait (and hope, as in hope EWZ doesn’t go crazy in one direction or the other during the next week).

Jay Kaeppel