Crude leads again, and I get pinned on the ES… What a week!

Well– I can’t say enough about the unbelievable performance and “justice” in the price of Crude Oil these past few days… I honestly can’t understand how we really fell this low in price (again), but at least during these last two sessions; the oil bulls have come out to rally. Front month Crude Oil (CL) again (2nd day in a row) was the largest gainer of any futures market tradable on earth. Thus if you are a bull, and you are trading these markets, the last two sessions, there wasn’t a better product than looking within the energy space — and looking directly at CL was the only choice at this point, or at least for me.

OCT 15 Crude Oil opened @ 42.68, traded as low as 41.78, as high as 45.90, ultimately to settle at 45.22 +2.66 a barrel today! The NOV-Dec-Jan were all “just as bid” as clearly players wanted to get long Crude Oil as we had one of the largest short squeezes back to back in Crude Oil in a very very long time (Well over 12% gains for the week). This momentum and strength could be seen spilling over from the perma-bid in the distillates (RBOB HO) the products have had a “real bid” as Q3 is coming to an end. All of a sudden – the bears have gotten very quiet (literally where have they been?), but now we start to have bulls coming out again, and I remember this earlier in the year when we fell to low 40s in March, only to be trading above 60 by April. **All the bulls came out once or as we started getting back towards the 2015 highs… I am cautiously optimistic going forward, as I clearly think we could/should trade higher than where we are and have been, I respect markets and risk, thus I can’t sit naked and pray… I will stay long (if I want), but I will do so through calls or with protection in puts or selling calls against long futures (basically synthetic long calls) at that point. *Basically as long as “you know your risk”, I think there is no better place to be taking attempts at scalping and speculating than the futures market. Again, I don’t give investment advice, all I can do is share with you my journal/notes regarding some of my trades or what’s on my mind market wise.

The last part of the post I want to touch on expiration, I like to play weeklies, I like to play end of months, different expirations don’t scare me, but it is important to know all the rules or steps one would take in any scenario, (as you trade into or though an expiration). As I was feeling rather euphoric/confident regarding my recent Crude trade, and the general direction of my recent “risk”… I figured I should take some shots at getting long the stocks again, as I had puked the ES last Friday and been focused elsewhere— I thought maybe this Friday we rally to close. *Well by the end of the day, I had gotten my rally, I mean literally into the final minutes of trade, the ES went from below 1972 at 14:42, to above 1990 by 15:13! This really is not that big of a move (for this week), but I was certainly not expecting to see my last shot ES options play turn into anything but zero with minutes left. But I lost on the trade overall, I cut my chances of losses, and attention to detail helped me scrap nickles and dimes as more of my weeklies became ITM… But- overall, the problem was not only that these options were expiring at 3pm today, but I did not have quite the backup plan or vision for this brief smug ES trade, nor the set-up, patience, etc. I mean sure stocks could rally into close (and they did!), but we had already came up huge off of Monday’s debacle and so on… this was a bit aggresive. Ultimately I got pinned on some of my calls to (the 1985s), which ended up working out (as in not going to zero) since we had that pop — but you should have seen me panicking when I realized we were .25 or .50 ITM on 1985 and I wanted to know if I was long ES or not, as we popped to 1990 and I got “lucky” learning a lesson and not losing to much $. Overall – the last part of the post is to point out – “Sometimes the best trade, is no trade at all”. Basically don’t overtrade, it’s lucky enough to catch good moves this week and “live to trade another day”.

A Epic, record, volatile week for the books. I can barely remember the beginning of the week to be honest, what a long couple days, I can’t imagine any trader (win or lose) who isn’t finally relieved and relaxing this weekend… That is… Until Sunday at the Futures open again!

Let’s try again next week. Have a GREAT weekend! – Happy Trading.

-Bret Rosenthal