OPTION TRADE OF THE DAY!
Crude Range Trade- We see Crude running out of gas as it becomes range bound and are thinking that it will be trading somewhere between 43 and 53 dollars a barrel come the last week of June as the supply and demand levels reach an equilibrium. We like the trade as seen on the chart, we are buying the July 5300/4900/4500 Put Butterfly which is buying one 5300 July put, selling two 4900 puts (to collect premium), and buying one 4500 put for protection. This trade is costing under $500 which is your risk and the profit potential at 4900 is about $4,000 before cost consideration. The trade would be profitable with the market between 45.50 and 52.50 with the most return being seen at 4900 at expiration. Above or below the spread your losses are limited to the premium paid.
PLACING CONTINGENT ORDERS SUCH AS “STOP LOSS” OR “STOP LIMIT” ORDERS WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS. SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.
Past performance is not indicative of future results.
The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
FOR CUSTOMERS TRADING OPTIONS, THESE FUTURES CHARTS ARE
PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THEY ARE
INTENDED TO SHOW HOW INVESTING IN OPTIONS CAN DEPEND ON
AN OPTION PURCHASER IS BUYING AN IN-THE-MONEY, AT-THE-MONEY,
OR OUT-OF-THE-MONEY OPTION. FURTHERMORE, THE PURCHASER
WILL BE ABLE TO DETERMINE WHETHER OR NOT TO EXERCISE HIS
RIGHT ON AN OPTION DEPENDING ON HOW THE OPTION’S STRIKE
PRICE COMPARES TO THE UNDERLYING FUTURE’S PRICE. THE FUTURES CHARTS ARE NOT INTENDED TO IMPLY THAT OPTION PRICES
MOVE IN TANDEM WITH FUTURES PRICES. IN FACT, OPTION PRICES MAY ONLY MOVE A FRACTION OF THE PRICE MOVE IN THE UNDERLYING
FUTURES. IN SOME CASES, THE OPTION MAY NOT MOVE AT ALL OR
EVEN MOVE IN THE OPPOSITE DIRECTION OF THE UNDERLYING FUTURES CONTRACT.
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