OIL TRADE UPDATE

“Fade into you, I think it’s strange you never knew”  – Mazzy Star

I have a lot of favorite songs and this is one of them.  Something about the 90’s – music will never be the same.

Things have been going as expected with the market neutral trades on Crude Oil.  I wrapped up last month with consecutive small losses making March a losing month overall.  However, my first two trades in April are up a decent amount so far.  That sort of pattern is typical with this style of trading.  You will see some small losses and might get a string of 3-4 of those in a row at times.  Then come the big winners.

Here are the trades I currently have open.

CL (Trade 26) – Using the July futures options, strikes at 65.5-62-58 and days to expiration at 68. This trade is currently up 8.5% after 18 days.

CL (Trade 27) – Using the July futures options, strikes at 65-61.5-57.5 and days to expiration at 68. This trade is currently up 1.1% after 3 days.

I’m starting to look at how to incorporate SPX again in the future and leaning towards a structure like the Parking Trade which was created by Tim Pearson.  Expected returns are lower than a market neutral butterfly, but I like the idea of diversifying with uncorrelated markets.  Doing some testing and looking at optimal allocations in both strategies.