As my regular readers know I have been using an option strategy called a strangle where we write put options below the futures price and write call options above the futures price. We have done 4 of these since late February. Three of these have already expired worthless and we have kept our entire premium we received and the last, 30 year bonds is likely to end up worthless as it expires next Friday April 20. We have done a crude oil previously and will be looking at crude again here where we will sell the June $117 calls and sell the June $87 puts. We will take in about $650 for this strangle and the options expire in 37 days on May 17. See the chart below to note that crude has not been below $90 since early November or above $112 so we have plenty of room within this range.
The Trade: Sell or write the June 87 puts and 117 calls for a total premium of 65 points or $650 each
Protection. Exit the calls if futures exceed $117 or drop below $87
Objective: Options expire worthless and we keep the $650 premium