As oil slid 6 percent on Monday, we take a look at how traders can take advantage of the volatile market using options
The past week has seen crude oil slump even further with price action now below its previous low of $39.55, which was touched upon briefly on August 14 two weeks ago. The fundamentals for this commodity are still putting a lot of pressure on price. Fears of a slowdown in the global economy is the main factor, led by the US as the Federal Reserve starts increasing interest rates which could cause an economic slowdown and followed by China, which recently depreciated its currency over concerns of economic growth.
Supply does not seem to be diminishing with Iranian oil on its way to enter the market soon, adding further downward pressure. Last week’s data released by the EIA (Energy Information Agency) for crude oils stocks was expected at -1 million barrels but was actually released at +2.62 million. A large increase in supply over expected numbers, which has inevitably pushed price lower quickly.
This Wednesday’s figure is expected at -1.8 million, any number that is higher could give more momentum to the downside, a number released as expected will probably leave the current trend intact. United States Durable Goods Orders will also be released on Wednesday but at 12.30pm, this being an indicator of economic activity. It is also expected to be a negative number at -0.45% compared to last month’s number at +3.4%.
Consumer confidence will be released tomorrow at 2pm and is expected to be higher than the previous number of 90.9 at 92.5; this is an indicator of general consumer sentiment and a gauge for retail economic activity. It would take higher than expected numbers for the economic data and a very low EIA data to give crude oil some upward price momentum.
Technicals
From the day chart we can see how there is a clear bear trend in act, however price action is beginning to move extremely far away from the bottom side of the Ichimoku Cloud (Red vertical lined area) by approximately 26%, this indicates extreme oversold levels which could lead to a correction and a brief increase in price as the markets consolidate. A close above the Fast line (Red line) could be an early indicator of that reversal, resistance is at $40.785.
Taking Advantage of the Market with Options
If you think price will continue to fall due to the overall economic situation and more negative data in the coming week, you may buy a Put option, giving you the right to sell crude oil at a fixed rate (strike) within a predetermined date (expiry) for a specific amount. In the below option example traded via an online platform, you can see that a Put option on crude oil with strike $38.53, expiry 7 days, for 100 barrels will cost $83.56, which is also your maximum risk
If on the other hand you feel that the price of oil may have reached a bottom or that data over the coming week will be positive for crude oil price, then you may buy a Call option, giving you the right to buy crude oil at a specific strike, expiry and amount. From the screenshot you can see that a Call option on crude oil, strike $38.34, expiry 7 days, for 100 barrels costs $83.18, which is also your maximum risk.
The past week has seen crude oil slump even further with price action now below its previous low of $39.55, which was touched upon briefly on August 14 two weeks ago. The fundamentals for this commodity are still putting a lot of pressure on price. Fears of a slowdown in the global economy is the main factor, led by the US as the Federal Reserve starts increasing interest rates which could cause an economic slowdown and followed by China, which recently depreciated its currency over concerns of economic growth.
Supply does not seem to be diminishing with Iranian oil on its way to enter the market soon, adding further downward pressure. Last week’s data released by the EIA (Energy Information Agency) for crude oils stocks was expected at -1 million barrels but was actually released at +2.62 million. A large increase in supply over expected numbers, which has inevitably pushed price lower quickly.
This Wednesday’s figure is expected at -1.8 million, any number that is higher could give more momentum to the downside, a number released as expected will probably leave the current trend intact. United States Durable Goods Orders will also be released on Wednesday but at 12.30pm, this being an indicator of economic activity. It is also expected to be a negative number at -0.45% compared to last month’s number at +3.4%.
Consumer confidence will be released tomorrow at 2pm and is expected to be higher than the previous number of 90.9 at 92.5; this is an indicator of general consumer sentiment and a gauge for retail economic activity. It would take higher than expected numbers for the economic data and a very low EIA data to give crude oil some upward price momentum.
Technicals
From the day chart we can see how there is a clear bear trend in act, however price action is beginning to move extremely far away from the bottom side of the Ichimoku Cloud (Red vertical lined area) by approximately 26%, this indicates extreme oversold levels which could lead to a correction and a brief increase in price as the markets consolidate. A close above the Fast line (Red line) could be an early indicator of that reversal, resistance is at $40.785.
Taking Advantage of the Market with Options
If you think price will continue to fall due to the overall economic situation and more negative data in the coming week, you may buy a Put option, giving you the right to sell crude oil at a fixed rate (strike) within a predetermined date (expiry) for a specific amount. In the below option example traded via an online platform, you can see that a Put option on crude oil with strike $38.53, expiry 7 days, for 100 barrels will cost $83.56, which is also your maximum risk
If on the other hand you feel that the price of oil may have reached a bottom or that data over the coming week will be positive for crude oil price, then you may buy a Call option, giving you the right to buy crude oil at a specific strike, expiry and amount. From the screenshot you can see that a Call option on crude oil, strike $38.34, expiry 7 days, for 100 barrels costs $83.18, which is also your maximum risk.
Gender Gap in Online Privacy Concerns: Women More Reserved in Sharing Personal Data
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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