TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
OPTIONS PLAY: Buying Call Spreads On Heating Oil Futures
This article will focus on buying Bull Call Spreads on Heating Oil Futures.
MY ANALYSIS
Fundamentally, in my view HEATING OIL FUTURES could rally for 3 basic reasons:
1. Refinery Strikes In France (10/22/10)
2. Weaker U.S. Dollar
3. Anticipated Chinese Led Demand For Crude Oil
Technically, I see HEATING OIL FUTURES in a SUPER-TREND higher on a weekly chart indicated by the market trading above the both the 9 week Moving Average and the 20 week Moving Average as they point higher. We could also be looking at what could be the start of a BULL FLAG formation if the market can take out the previous high of $2.33/gallon. The trend up, in my opinion, could continue. See weekly chart below. Additional charts, studies, and commentary can be found at http://markethead.com/2.0/free_trial.asp?rid=McKinney
WEEKLY CHART
OPTIONS PLAY
BUY BULL CALL SPREADS OR STRAIGHT OPTIONS
We also buy in a 3 to1 ratio an outright PUT in case the market makes a MAJOR move against us.
FOR A FREE CME REPORT ON OPTION BASICS CLICK HERE: http://www.zaner.com/3.0/mmck5.asp
WE ARE ALSO FOCUSING ON COMMODITY OPTIONS IN U.S. 30 YEAR TREASURY BONDS, GOLD, OIL, GRAINS, SOFTS, and INDICES.
FREE QUOTE- “I might flip, but I wont flop.” -Woody Paige
Before you place any of these trades in your account you should call or email me with your phone number for a detailed explanation of the strategies and the risks involved at 312-277-0115 or mmckinney@zaner.com.
Futures, options and forex trading is speculative in nature and involves substantial risk of loss. All known news and events have already been factored into the price of the underlying commodities discussed. The limited risk characteristic of options refers to long options only; and refers to the amount of the loss, which is defined as premium paid on the option(s) plus commissions.
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 THE UNDERLYING FUTURES PRICES; SPECIFICALLY, WHETHER OR NOT 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
