Upcoming Commodity Straddles

#1

Hey guys,

If someone can point out where I went wrong with the Straddle/ IC calculator, it would be very much appreciated :smiley:

This was the straddle I entered. (this was just a test to make sure I am ready for the real thing tomorrow… there was no rhyme or reason to taking the trade)

And then when i entered the numbers into the Calculator, this is what appeared…

Opps… this doesnt look right!! :open_mouth: But I cant figure out what i entered incorrectly,

I used it Friday with a NFP trade and didnt have any issues.

One more question… with the Oil, Crop and Natural Gas straddles… what should my max risk be?? $60??

Thanks a bunch

#2

If you don’t enter the contract info a certain way, it doesn’t get recognized by the calculator. It’s always best to use the clipboard icon on the scanner to copy the info and then just paste it into the scanner and it should look something like this:

Most of the news straddles/Iron Condors have the premium stated in the News Trading Plan Calendar. In the case of your straddle, with the floor and ceiling meeting at 36.00 and your max risk being $100, price would have to move 100 ticks in either direction just to break even and 200 ticks for a 1:1 risk/reward ratio. Not entirely impossible, especially for Oil inventory reports, but not the most ideal setup. Also, when you have that much risk on a straddle setup, you want to look at a chart with expected ranges on it for the entire duration of the straddle and compare a straddle vs Iron condor to determine which would be a better play for you. The reason I say this is that with the oil inventory report due out tomorrow and the expiration of the contracts out more than 16 hours away, you have a ton of premium built up into those contracts due to the higher implied volatility. In this case, I could look at doing an iron condor and then when the 6.5 hour contracts come out at 8:00 am I could use those to do the straddle and depending on where those contracts line up, they may even be able to act as hedges for the Iron condor.

Just something to think about. :smile:

Peter.

#3

Here is what it looks like on a chart.

#4

Ohhhhh the clipboard icon!! see I knew it was something simple like that.

Just tried it and it worked perfectly! Thank you.

And thank you for taking the time to explain why potentially taking that trade would not have been the best idea. I was just trying to get as much information up to try and get help with the calculator. No way would it have been a real trade. Apex has taught me better!

But that brings up another question. I know the News Plan says to use an 11am expiration (although I have been successful the past couple weeks in demo using the 12pm ones.) But would the 8am - 2:30pm be an option as well??

And have you always been a night owl?? Or is it just a perk of “retirement?” :wink:

#5

Peter,

Thanks for all of your response for us new traders I have learned a lot from your replies. If you have the time can you break down a Iron condor and Straddle set up basically a step by step guide(example). If you do not have the time I do understand just thought I would ask.

Thanks