Carley Garner's Blog: What's new on DeCarleyTrading.com, page 56

Crude Oil's Slippery Slope

This newsletter was emailed to DeCarley Trading clients on January 3rd, 2012

Thank you for choosing DeCarley Trading.  We are proud to offer the DeCarley Perspective as an informational guide to our clients and subscribers.  We hope that you walk away from the newsletter with a better understanding of market fundamentals, as well as technical and seasonal factors. 

**There is substantial risk of loss in trading futures and options.

**Past performance is not indicative of future results

On the radar:


Oil's slippery slope
Crude Oil

In a DeCarley Perspective dated December 3rd, we suggested that a pullback in crude oil into the low 90's could be an opportunity for the bulls.  However, this time around seasonal tendencies and technical analysis has us leaning the other way despite today's gangbuster rally.

To start out the New Year, February crude rallied over $4 in a single session on Middle East tensions combined with a weaker dollar and higher equity prices.  As we are all aware, higher stocks is  (currently) considered an optimistic outlook for economic growth, and therefore crude oil demand.   Additionally, because crude is priced in U.S. Dollars a weaker greenback is supportive for crude prices as well as overseas demand. 

Tension between Iran and foreign nations is heating up and this appears to be enabling ballooning energy prices as traders build in a risk premium.  However, it is important to remember that Iran began threatening oil tankers and/or missile testing in the Straits of Hormuz as early as mid-December.  Accordingly, the recent $10 increase in oil traded on the NYMEX can largely be attributed to fears of some sort of interference in oil shipments through the canal.  Most analysts agree that a complete closure of the Strait is an absolute worst-case scenario and isn't necessarily likely.

Had it not been for surprise builds in WTI inventories in Cushing Oklahoma, crude oil might be trading $3 to $5 higher today.  Last week's EIA report suggested inventories had risen 3.9 million barrels to 327.50 million stored.  Historically, this area has been a relatively comfortable level; the previous decade has seen inventories hover between 270 million barrels to about 370 but has spent most of the time near 330.  In theory, this combined with lackluster economic activity should be enough to cap the upside potential in crude oil. 

Although we think all signs are pointing south, we can't ignore the fact that the momentum is higher and specs are starting to get excited about crude oil again.  With this in mind, we feel the best course of action is to patiently wait for better prices to being establishing bearish positions.  Specifically, it appears as though follow through buying will likely bring the February crude contract into the $106/$107 area.  However, further deterioration in Middle East stability could lead to a quick run to the $109 area.  We'll be comfortably bearish near the first noted area but urge traders to save some ammo for the possibility of prices reaching the latter level (at which time it might make sense to add on to bearish trades). 

Some of you might be holding short March 122/78 strangles which are essentially breaking even.  We'll be looking for a place to buy the puts back in the coming days and might look to ride out the call "naked". 

 

 

DeCarley Trading

info@decarleytrading.com

1-866-790-TRADE (8723)

 

**There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results.  The information and data in this report were obtained from sources considered reliable.  Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities.  Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Nadex Binary Options are now available to online traders via BESTDirect Web!

Nadex Binary Options are now Available to Online Traders with DeCarley and PFGBEST
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Click here to read a recent SFO Magazine article regarding NADEX binary options.

Click here to read the PFGBEST Nadex education pamphlet.

Click here to open a trading account with DeCarley to trade Nadex options, futures or FOREX (if you already have an account but would like to be enabled to trade Nadex, email us using the address below).
 
DeCarley Trading
www.DeCarleyTrading.com
info@decarleytrading.com
1-866-790-TRADE(8723)
 

*Despite limited risk, there is substantial risk of loss in trading Nadex options!

 

Commitments of Traders Report (COT)

 

Decoding the Commitments of Traders Report (COT) to Identify Overcrowded Trades  

 

When: February 21, 4:30 Eastern
Where: Online 

 

Click here to register for this FREE class!

 

If a stock trader wants to know what corporate insiders are doing with their shares, they look to SEC (Securities and Exchange Commission) filings for help.  Corporate officers, directors, and beneficiary owners are required to report trades they have executed in shares of their company within two business days.  Similarly, a commodity trader looks to the Commitments of Trader (COT) report for insight into who is buying and selling futures and options. 

The COT report released by the CFTC is the optimal gauge of market sentiment because it doesn't just portray the opinions of the general public; it provides insight into traders that are actually putting their money where their mouths are!  Join us to discover how this information might be helpful to market speculation.

Topics covered:  

What is the COT?
When is the Commitments of Traders data collected and released?
Long vs. Short Format
Standard COT, or Futures and Options?
Understanding the relative nature of COT
Commitments of Traders categories: Commercials, Reportables, Non-Reportables
Identifying overcrowded trades
Applying COT analysis to tradign futures and options

 

Click here to register for this FREE class!

 

Click here for more info on or to purchase "ATrader's First Book on Commodities"  

 

**There is substantial risk of loss in trading futures and options!!  

 

 

DeCarley Trading
www.DeCarleyTrading.com
info@decarleytrading.com      
http://www.facebook.com/decarleytradingcommoditybroker
http://twitter.com/#!/carleygarner
 

FREE Hightower Report Commodity Research

 

DeCarley Trading is constantly striving to provide traders with the highest quality trading education and research available.  After all, the success of our business is determined by the success of our clients!
  

Along with the DeCarley Trading newsletters you are familiar with (Stock Index Report, Bond Bulletin, DeCarley Perspective...), we are excited to offer our active clients access to one of the industry's most respected commodity and financial futures newsletters, the Hightower Report.
The Hightower Report's Total Commodity Research Center contains all the fundamental and technical information you need.


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Audio Updates

Trade Suggestions

Calendar and Interpretation of Key Industry and Government Reports

Fundamental and Technical Analysis

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Join Carley of DeCarley Trading to Discuss Currency Trading!

DeCarley's own Carley Garner will be presenting at The Futures and Forex Expo in Las Vegas, and we would love to see you there!
What: Currency Speculation: FOREX, Futures, or ETFs?
When: Saturday, September 24 2011 @ 4:30 - 5:30 pm (Pacific Time)
How: Click here to register for this FREE event (use priority code 023406)
Where: Caesar's Palace in Las Vegas NV

Details: This is the perfect opportunity to meet face to face with Carley Garner of DeCarley Trading to ask questions and take advantage of the the free educational material presented by DeCarley and other reknowned futures and options traders. 

See you at the EXPO!

DeCarley Tradinginfo@decarleytrading.com1-866-790-TRADE(8723)

*There is unlimited risk of loss in trading futures and options! 

 

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A Crash Course in Commodities

 

In 8 easy to follow and understand video lessons, Carley Garner demystifies the basics of commodity trading, helping you to quickly shorten the learning curve! Garner explains futures markets, contracts, long versus short, delivery, arbitrage, cost-to-carry, offsetting and rollover trades, spreads, costs, and more. Learn commodity trading from the ground up at your  pace...get specific solutions when  you need them!

Click here to purchase "A Crash Course in Commodities"
 
Click here to open a trading account with DeCarley Trading to begin working with Carley Garner or using one of our state-of-the-art trading platforms!
DeCarley Trading

1-866-790-TRADE(8723)
info@decarleytrading.com
www.DeCarleyTrading.com
 
www.ATradersFirstBookonCommodities.com
www.CommodityOptions.com
 
*There is substantial risk of loss in trading futures and options!!! 

Getting Started in Grain Hedging

Hedging Grains in the Futures and Options Market

   

Exposed to price risk across the grain markets? If so, this class offers some alternative views of using the futures and options markets to hedge the price of grain.  The presentation begins with a primer on opening a hedging account and then leads participants into fresh ideas in regards to stale hedging strategies.  Topics covered include using long puts as catastrophic insurance against falling grain prices, selling futures contracts in increments to implement a short futures hedge, and selling put options against short futures hedges to produce income and raise the overall average hedge price. 

 

Click here to view the archive of this class 

DeCarley Trading
1-866-790-TRADE(8723)
Follow us on Twitter: @carleygarner
 

Getting Started in Option Selling Part II

What: Getting Started in Option Selling Part II
Where: Online
Cost: FREE
How:  Click here to register for Part II of our series on learning to sell options on futures 

 

We have so much to say about option selling, we couldn't fit it all into one class!  Please join us for part two of our discussion on why option selling might be an optimal strategy for you. 
 
If you missed the first part of this series, you can access the archived recording for free here.  In part one we discuss option trading theory, the advantages and disadvantages of option selling, judging market conditions for short options, knowing the odds of success for short option traders, and comparing option selling odds to casino math. 
 
Topics covered in Part II include:

Managing risk and margin
Calculating the break-even point
Capturing market volatility
Trading option strangles
More...
Click here to register for this free class on premium collection in the futures markets 
 
Click here to begin selling options with an experience broker, or via one of our state-of-the-art trading platforms

 

Don't forget, DeCarley Trading provides clients with short option trading recommendations and well as entry, adjustment and exit guidance.

 

DeCarley Trading
info@DeCarleyTrading.com
1-866-790-TRADE(8723)
www.DeCarleyTrading.com
 
Twitter: @carleygarner
 
**There is a substantial risk of loss in trading futures and options!!

Getting Started in Option Selling part I

What: Getting Started in Option Selling

 

When: October 25 3:30 pm Central

 

Where: Online

 

Cost: FREE
 
How:   Click here to register for this free event

 

The characteristics of unlimited profit potential and limited risk lure traders to long options but we argue that limited risk doesn't necessarily mean less risk.  In fact, it is quite possible that option buying is far riskier than option selling simply due to the probability of success that each strategy faces.  In other words, although losses are limited to the premium paid plus commission for option buyers, it is highly likely that the trader will lose most or all of the value of the option.  I believe, most traders would agree their account would be better off had they sold every option they purchased and this isn't a coincidence. 

 

The mechanics of options are similar to those of an insurance policy and are, therefore, priced to lose.  An insurer stands to profit over time in exchange for accepting the risk of a claim being made on a policy; similarly, an option seller hopes to garner a return in exchange for exposure to the risk of taking the opposite side of the buyer.  Also similar to insurance companies, option sellers face the possibility of substantial losses should a catastrophic event occur (think hurricane Katrina or the flash crash).  Nonetheless, overtime insurers have managed to survive adversity and we believe prudent option sellers could face similarly optimistic prospects.

 

In our opinion, option selling is one of the most attractive forms of trading but proper risk management techniques, appropriate timing and discipline are a must as the risks are high.  This is a "must see" for anyone interested in a short option trading strategy.

 

Click here for free access to the "Getting Started in Option Selling" webinar

 

Here are a few highlights of the topics covered:

 

 

What exactly is option selling (aka option writing)?
Comparing option selling to casino theory
Understanding  the role of implied volatility in time value erosion
Timing is everything, even for option sellers!

 *There is unlimited risk in option selling!