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Potential reasons for the recent move upwards of CL are:
Potential oil worker strike in Nigeria,
trouble with Angolas oil exports,
oil and gasoline stocks fell in Belgium / Netherlands.
I sell many naked options, but usually not CL calls. A terroristic attack will cause a major move of the CL and a severe rise of volatility easily. I prefer to buy calls above the short calls.
We have completed 18 weeks this year of oil data. Starting with week 18 till week 37 the prior 5 years have shown decreases in oil inventory through this time frame.
But here is how CLu has performed the last 7 years
I am thinking about starting to sell August ZB Calls.
Pro
- the seasonal high is upon us
- trouble in Brazil may cause the farmers there to sell beans
- we seem to have a small bounce right now, but the overall trend seems to be down
- in the CoT, commercials are quite long, which seems to indicate they expect lower prices
Con
- it may be a bit too early
- chart indicates we may have had a consolidation and some upside is possible
I also intend to sell soybeans calls, but not at this time, not at current prices, and not the SQ contract.
1. The seasonal high for the SQ contract is - according to MRCI data for the 5 years and the 15 years pattern - end of June / early July.
2. Large specs almost hold a record short position.
3. The SQ contract is an old crop contract. In case of strong Chinese buying, of transport problems in Brazil or a strike in this country prices for the old crop contracts will move up sharper than for new corp contracts.
I intend to sell SX options with an expiry perhaps in July on a strong move upwards of the underlying contract, caused by one of the problems mentioned above. I will definitey not sell calls at a price of the underlying SX contract of below 980, and I would prefer to sell at 1030.