V. 26:10 (65): Futures For You by Carley Garner
Product Description
Futures For You by Carley Garner
TOO LATE TO BUY CRUDE?
The energy markets are moving. Is it too late to buy crude oil, or is this dip a long-term opportunity? Without a crystal ball, there is no way of knowing for sure. What I do know, however, is that crude oil is one of the most difficult markets to make money in, regardless of whether you are a futures or option trader. The margin requirement is extremely high, and so is the volatility and risk. In my opinion, long option strategies are nothing more than buying high-priced lottery tickets due to inflated implied volatility, premiums, and bid/ask spreads. Short option strategies and spread strategies face similar obstacles.
Unless you have deep pockets and a high tolerance for risk, there are better markets to trade. A crude oil price chart can be deceiving in that it seems as though it would have been easy to make large profits by simply being long. After all, according to Congressional hearings, it is the “greedy” speculators that have gotten us into this mess. Nevertheless, for the average retail trader the intraday and daily price swings can be financially unmanageable and psychologically unbearable. Imagine being long August crude oil futures during July 2008. In the first two weeks alone, you would have made or lost $10,000 several times on one contract.
TOO LATE TO BUY CRUDE?
The energy markets are moving. Is it too late to buy crude oil, or is this dip a long-term opportunity? Without a crystal ball, there is no way of knowing for sure. What I do know, however, is that crude oil is one of the most difficult markets to make money in, regardless of whether you are a futures or option trader. The margin requirement is extremely high, and so is the volatility and risk. In my opinion, long option strategies are nothing more than buying high-priced lottery tickets due to inflated implied volatility, premiums, and bid/ask spreads. Short option strategies and spread strategies face similar obstacles.
Unless you have deep pockets and a high tolerance for risk, there are better markets to trade. A crude oil price chart can be deceiving in that it seems as though it would have been easy to make large profits by simply being long. After all, according to Congressional hearings, it is the “greedy” speculators that have gotten us into this mess. Nevertheless, for the average retail trader the intraday and daily price swings can be financially unmanageable and psychologically unbearable. Imagine being long August crude oil futures during July 2008. In the first two weeks alone, you would have made or lost $10,000 several times on one contract.
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