Newbie futures question

[timscott]

I faded oil this morning buying 10 otm USO puts for $2 / contract.

Oil dropped @ $5 intraday, puts went to $4, for a $2k profit.

What would be the profit trading roughly the same dollar amount shorting oil futures for a $5 move?

tia

 

[ogarbitrage]

Tick = $10

 

[olias]

Quote from timscott:

I faded oil this morning buying 10 otm USO puts for $2 / contract.

Oil dropped @ $5 intraday, puts went to $4, for a $2k profit.

What would be the profit trading roughly the same dollar amount shorting oil futures for a $5 move?

tia

A crude oil futures contract size is 1,000 barrels. Every dollar that the futures moves is equal to $1,000 of profit or loss ($1 per barrel in other words). July crude oil is down about $2.50 for the day right now.

 

[increasenow]

Quote from timscott:

shorting oil futures for a $5 move

$5,000.00!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[rubibond007]

be carefull, the crude oil is in a contango, when this happen, USO tend to get "out of wack".

 

[bobbymak880]

Timscott:

I find ITM options (2 to 3 strikes) to be much lower risk than OTM.

YES, they're more expensive but you're getting more "bang for your buck"

b

 

[timscott]

Quote from increasenow:

$5,000.00!!!!!!!!!!!!!!!!!!!!!!!!!!

I only had to put up $2k, i was wondering if it even possible to only put up the same $2k in oil futures and making the same profit.

Kind of looking for best bang for the buck / lowest risk / highest return....

 

[Picaso]

In most firms you have to cough up the whole margin (as of today almost 12,000 USD), but in a few they have lower intraday margins (as low as 2,000, I hear, although I trade with IB and it is the full margin). There is also a e-mini contract at half the price and size.

So in order to make 5,000, 500 or 50 first you're gonna need 12,000. I guess that for smaller amounts you're limited to options.

Best trading,

Jorge