The December crude oil strangle which was initiated on October 9 of selling the December 106 crude oil call and selling the 7800 put expired yesterday. We had received $600 premium and the options expired worthless. We are currently holding January crude strangles being short the 7500 put and 10500 call. Now that the December options have expired let’s move out to February options on crude futures. We can sell the 10300 call and sell the sell the 7000 put and receive about $900 premium. We took in $930 for the January strangle which was  initiated on October 22. The February strangle has 63 days until expiration and the margin requirement will be about $2750.

The Trade:   Write / sell the February 10300  Crude oil call and write/sell the February 7000 Put at 90 Points OB
Protection:   Exit the call if futures close above 10300 and the Put if futures close below 7000.
Objective:     Futures between 10300 and 7000 at expiration and keep $900 premium

Thanks,

Bill Frejlich
The PRICE Futures Group
Author of The Windy City Trader

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