With the stock market strong and the recent oil weakness this morning I think this is a great time to get long oil between now and the end of the week in the binary options. A lot of times when currencies and the stock market are range-bound I tend not to like to take trades, but I am looking for a breakout of Oil to the upside and I thinking that that $49 will act as support.
When I look at the nadex market, I think about how much Oil can move to the upside and the average true range is $1.03 which means that it moves up or down $1.03 for 30% of all the days. So, using this indicator, it can break through the old highs of $50.34 and move to $51 by the end of the week. So, I look at the weekly options to figure out which one I would want to trade.
There are so many choices, if you like the 51.25 strike your risking only $21 to make $79, but you would have to realize that Oil has to make a huge move higher between now and the end of the week. If you thought that it was not going to sell off , you could consider looking at an in the money call type strategy and possibly look at the 48.25 strike, where you risk $86 to make $14. Otherwise, if I thought Oil was just going to be flat to move higher I could look to buy the $49.25 for $66 to make $34.
There are a bunch of options choices but looking for Oil to break higher between now and the end of the week.
Andrew Keene is President & CEO of AlphaShark Trading, which he originally founded as KeeneOnTheMarket.com in 2011. Previously, Andrew Keene worked as a proprietary trader at the Chicago Board Options Exchange. He began his career in the prestigious Botta Capital 'clerk-to-trade' program, and would eventually co-found KATL Group.
Andrew currently actively trades futures, equity options currency pairs, and commodities. He is a regular guest market commentator on such networks as Bloomberg TV, CNBC, and Fox Business.
Keene's first love will always be trading, but he is arguably even more well known for building a trading room. Andrew is especially proud of having taught his personal strategies to over 50,000 students over the past 4 years.
In 2015, Andrew began appearing as a regular guest on CNBC's Trading Nation, where he focuses on educating viewers on equity options markets and the trading insights they provide.
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