The April Heating oil is currently trading near 322. This market has been very overbought technically and this is not even accounting for warmer US temperatures. It appears that major support is seen first at 310, then 302. A few weeks ago I recommended an option strangle for crude oil and sold the April $125 call and at the same time sold the $85 put. Futures are currently at $107 for crude and those options expire on March 15th and likely will expire worthless, meaning we have kept the entire $570 premium collected for that one. This is the same idea except we will be doing a strangle for April heating oil and sell (write) the 350 call and the 290 put. We can take in 200 points or $840 for this strangle and the options will expire on March 27 or about 3 weeks. The margin is roughly $1700 for this trade.
The Trade: Write an April 350 call and April 290 put for 200 points collectively or $840 at $4.20 per points Protection: Buy back call if futures exceed 350 and/or buy back the 290 put if futures drop below 290. Objective: Futures stay between 290 and 350 for the next 3 weeks and options expire worthless so We keep the entire $840 premium collected.