Menu

Search

  |   Technicals

Menu

  |   Technicals

Search

FxWirePro: Stay hedged or arbitraged in WTI crude ahead of economic concerns and API guesstimates

Technically, both daily and weekly charts suggest sell indications as there RSI signaling downward convergence with the slumping prices (currently RSI 14 trending at around 60 levels), while %D crossover sustains on slow stochastic (currently %D line at 60), overall we don’t see any sort of strength in this energy commodity that can pull back southwards from the current levels.

So from current levels keeping speculation mindset we recommend shorting near month futures for target towards $46.50. Light Sweet Crude Oil (WTI) futures and options are the world's most actively traded energy product. WTI plays an important role in managing risk in the energy sector worldwide because the contract has the most liquidity and most transparency.

The deterioration in the global economic outlook, financial market uncertainty and ripple effects on key areas of oil demand growth are likely to exacerbate already-lackluster industrial demand growth trends.

Crude oil for August delivery on the NYME dipped 0.73% to $48.63 a barrel. During US trading session, the American Petroleum Institute would release its estimates of crude and refined product stockpiles at the end of last week. The data will be followed on Wednesday by more closely-watched figures from the U.S. Department of Energy.

Alternatively, once can also prefer ATM or slightly OTM puts on hedging grounds for the prevailing bearish risks but if puts seem overpriced relative to calls, the arbitrager would sell a naked put and offset it by buying the synthetic puts. Similarly, vice versa when you think calls are getting overpriced in relation to puts.

Arbitration can also possible through box spreads where buying debit call spreads and debit put spreads for a risk-free returns.

The opportunity for arbitrage in options market exists once in blue moon for individual investors as price discrepancies often appear only for a few moments.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.