Crude Oil -News Event Strangle/Straddle

#1

6-21-17 Wednesday.

I set up a straddle (spread) based on today’s news release and have noticed that maybe Oil does not move fast enough and long enough to cover the distance to make a profit.

Today’s setup landed just about in the middle of the top and bottom spread for an almost complete loss. Never have I had this happened in demo or the few live trades entered.

I chose the straddle based on the proximity in comparison with a binary strangle.

Is there ever a time of when NOT to do a news event straddle when news comes on on CL-Crude oil? because maybe its just not going to move enough?

Hope to hear from someone.

  • found an answer on the "How to trade News event tutorial 51:00min)
  • any other suggestions.
#2

There are some notes on the News Trade plan for the Oil Inventory report. Those might help.

#3

Think it was just an extremely unlucky trade. Even though it was a “positive” report… the market will do what it wants to do. So the upside was extremely limited

Had it been “negative” you could probably bet it would easily have dropped as much as it did later on in the day.

Although the risk of losing the entire amount is always a possibility, with straddles its a lots less common. And on something as wild as oil… :astonished:

The only time I may think twice about taking a trade like this, is if it had moved a whole lot in one direction before the news event. When I see things approaching the 2 and 3 deviations, I would get a little worried about entering a trade. But that is just me personally.

Dont think there would really be any way to “improve” the trade… I would just chalk it up to being unlucky this time and come back next week and get better results hopefully :slight_smile:

#4

Great input. Thank you!