Crude Oil Futures Trading Lesson | Advanced Trading Strategies $/CL $OIL $VIX

In a PDF that we shared with all of our subscribers, we noted, “The past 23 weeks of trade have seen oil close inside its implied range”. The straddle is the implied range. We think this is just the start of this move in oil.

And I'm just looking at a daily chart going back a year. You can see the monthly ranges represented by the bands, and so this is what the straddle is pricing for this month.

So if we go back to the Discord, “The past 23 weeks of trade have seen CL close inside its implied range.”

So let's go back to Discord. It's already outside of it's weekly range. “In just one day, the whole week's range was blown out.” So here I have it on monthlies with this tool, which we call the Volatility Visualizer. And we're looking at the monthly expected move. We can also look at the weekly expected move.

This tool (Volatility Visualizer) is something that we had to build because what we're doing is taking the straddle prices from the options and bringing them out into this chart in the monthly data and in the weekly data.

So in the PDF that we shared with everyone, we posted on the YouTube channel. That's where we shared what he called “The trade of the year.” July 5th, oil was trading 76 and now it's trading 66, 65. And that's why all the members are talking about “It's so sad that I don't have more.” “Doubled my money, looking to sell some downside and lock in those gains.” So that's why all these guys are up so much money on their oil shorts. Now, this is what happens, people start closing things a little bit too early where Pablo and I think that this move is just the start of a bigger move to come.

“So when this happens 95% of the time the price continues, so extremely bearish.” Now, the reason that happens is because people who are short options, begin hedging their options by selling into the sell-off. That's a gamma thing. And the yet-to-be educated, retail traders have their stop-loss orders gobbled up by price action. Which just means that people who bet on the long price of oil are being forced to sell because of the big down move. And then the first comment was, “Remember the expected move. People who are short volatility are short options. People who are long volatility are long options.” So those are people who are betting on oil to not go anywhere. Once it starts going down, they have to sell to hedge their positions because they're betting for it not to go anywhere. They don't want to lose all their money… they're getting longer and longer and longer. So they have to sell, sell, sell. The trade is working out awesome. We expect it to be quite a bit more follow-through, but I wanted to you make sure that you understood this.

Just like we're looking at the expected move with oil. You can do the same analysis with a stock, or with gold or, with anything else it's all the same thing.