Dear Fellow Traders,
this is a special crude oil report. Looking at the
news headline you will notice that crude oil has
just break all time high. Hitting as high as
$87.
As a trader how can we take advantage of the current
situation. Will crude oil break $90 or will it
retrace back to $80? That is a golden question
that you have to ask yourself.
For Non Directional Trading, we employ special
skill set. The question to ask will be.
Will Crude Oil and Can Crude Oil break $90? If yes
how likely will it break $90 in the next 30
days?
Will Crude Oil and Can Crude Oil break $100? If
yes how likely will it break $100 in the next 30
days?
Will Crude Oil and Can Crude Oil break $105? If
yes how likely will it break $105 in the next 30
days?
Looking at the
above Crude Oil charts. In this case, we predict
that Crude Oil will not go above 107.00 in the
next 27 days by 13th Nov 2007. If we
are right in this predicting we make money.
The Red Vertical line indicate when the options
expire. The Blue horizontal line indicate the
level where the position will start to loss
money if it is broken. This ebook did not touch
on the adjustment strategy yet. The updated
chart will be shown in the next released of this
ebook
The 107.00 Call
Options is Worth $130. If Crude Oil stay below
107.00 by 13th Nov 2007. This trade
will profit $130.
The 107.00 Call
Options required an Initial Margin of $449 and
Maintenance Margin of $332. To be on the safe
side we will be using double of the initial
margin required to put up this position.
Initial Margin - $449
Double Initial Margin -
$898
Premium Collected - $130
Days to Expiry – 27
Return on Investment per
month – ((130 / 898) / 27) * 30 = 16%
This trade give us about
16% return a month
Probability Analysis
Volatility - 23.95%
99.99% crude
oil will expire below 107 by 13th Nov 2007
Crude Oil
Expire Worthless on 13th November
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