Crude options plays, anyone?

xandman

xandman

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There was an interesting analogy from a press interview when a deal broke down in 2014. Though at these IVs, I am going to need a big move. I bought dearly and expect volatility contraction from a consummated deal. But Putin may decide to hand me some tuition money, yet.

Wednesday morning prior to Thanksgiving, CL made a 2% move down and recovered. Runner's stretch...
 
I have CL opt plays, however none of them involve trying to land IV moves. A tad to difficult for me. Infact I wish there wasn't any IV at all :).
 
yeah, buying gamma is pricey. I did have a directional play which was short OTM put spreads. The 2% dip shook me up some.

I am not sure what Putin is playing with the insistent "freeze" talk. It requires others to make deeper cuts. It's a potential deal breaker. So, I'm going long vol instead.
 
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Quite a bit of drama. This trade is making me bipolar. The post Thanksgiving move in CL was -4%. Suddenly, I don't feel bad buying those puts at a high.

An update:

Saudi/Russia not coming to an agreement http://www.bloomberg.com/news/artic...ll-out-of-russia-talks-as-opec-deal-no-closer

Iran is optimistic http://www.reuters.com/article/us-iran-algeria-opec-idUSKBN13L0G8

Additionally, I came across an old options insider interview with Blu Putnam and a guy from Akuna. The Akuna guy didn't believe that we would see an 80 vol level ever again. : (


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A $1.50 move during RTH is a hail mary run :). Thats right on the edge of maximum movement for CL. Would have been quite a nice trade.
 
CBC said:
A $1.50 move during RTH is a hail mary run :). Thats right on the edge of maximum movement for CL. Would have been quite a nice trade.
More...

Still happening. Repeated runs to $46. They are running the stops like forex.

At least equity markets seem to like lower oil.
 
I am happy IV didn't implode, but I was expecting a move to $51. Still, making money is better than losing it.

I may just cash it early because the skew has already flipped. I don't know how MMs do it and still keep quoting during the day. Incredible.

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It is simple. The high side is being bought up due to demand(left = high put skew). People were thinking oil was going down(right = high call skew). Whether it is a put or call doesn't really matter. It's just the terminology. So, now they think it is going up. I am hoping you can see the x-axis of the graph and see the strike prices.

There are safeguards for buying/selling too much delta for one direction. Too many hits on one option contract might send off alerts. Generally, MMs just expand the b/a spread and can quickly turnover the inventory for a profit if someone was crazy enough to hit the bid or lift the ask.
 
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