This week we are posting two advisories, and we feel this trade is worth discussing. Crude oil has been on a rip higher over the last week or so and has made a double top at 105. We hold the bearish stance on Crude and we think if we get a push lower we will see more selling. Our short term target is 101.50
Trade Idea: Crude Oil Short Sept/Oct Another highly correlated 5 year and 15 year seasonality pattern. On average over the last 15 years this spread has traded as low as $.05 and as high as $1.18. We like this spread around $1.10. We will risk 20 ticks and our target is $.70. Making our risk to reward very appealing. With this spread we have no statistic on win percentage, best up or worst down, but we do have a great seasonal pattern, technically we are bearish on crude and now all we need is to get a high probability area to sell this spread. One reminder, if you take this trade do not hold past June, this position needs to be covered before the end of May.
We have an GTC order in to sell this spread at $1.10.