Disclaimer: there is risk of loss trading futures and options. Past performance does not necessarily indicate future results. This is our opinion and should be treated as such.

We had a sell signal and hedge alert at $8.50.

Link to that alert: Click Here to View

We are nearly $1.00 off those recent highs. We like buying back sold calls or re-owning at these levels if you took advantage of that sell signal.

Scroll to view a strategy we like to consider.

Why the alert?

Dec KC has given back 61.8% of the entire rally from the August lows.

Not only is this the most common retracement. But we are re-testing those prior highs from May as well as July.

We also have a shelf of volume that sits right here which can act as a magnet for prices.

What if we fail to hold this level?

Then we could drop towards the next level of support.

Which is going to be the golden zone (50% to 61.8%) all the way down to the June lows instead.

Which aligns with the next volume shelf.

One strategy we like:

Sell $7.20 put
Sell $9.00 call
Buy $8.00 call

A trade similar to this could roughly be a zero cost trade but does require margin.

It gives you the ability to re-own on the board 45 cents lower than we are today. Which aligns with that next level of support if we fail this current support.

It has a max upside of $9.00

Feel free to give us a call if you’d like to talk or put together a strategy. There are several strategies you could consider, and this strategy may not be right for you.

Office: (806)484-1214

Here is a visual of that trade.