TWIFO 161: Crude Skew and other Mysteries

• HOST: MARK LONGO, OPTIONS INSIDER MEDIA GROUP
• CO-HOST: NICK HOWARD, BANTIX TECHNOLOGIES
• CME HOTSEAT GUEST: ADAM WEBB, Founder of Macrohedged 

CRUDE OIL

Oil ends lower as support from storm-fueled, 11 million-barrel drop in U.S. crude supplies disappears

• Oil futures settled lower on Wednesday, as support from a storm-induced, 11 million-barrel drop in U.S. crude supplies wore off and traders turned their attention back to concerns about weaker energy demand.
• U.S. crude inventories dropped by 10.8 million barrels for the week ended July 19, according to data from Energy Information Administration Wednesday, and production also edged lower, with analysts citing temporary disruptions caused by a Gulf of Mexico storm earlier this month.

METALS

GOLD

• Gold prices have lost their good gains seen earlier in the session and in overnight trade, following some stronger-than-expected U.S. economic reports.

Reasons Gold trade 

• Skew was over done 
• Could get size on 
• Limited risk 
• Didn’t want to play a full RR as there was silly blow out risk to 1500
• So we looked at just the PSkew 

EQUITIES

• VIX  13 - DOWN 1.25 FROM LAST SHOW - THREATENED THE 12 HANDLE RECENTLY

• VVIX: 87.5 -  UP 3 FROM LAST SHOW

• RVX: 15.80 -  DOWN .6 PTS 

• VIX/RVX SPREAD - 2.8 - WIDER BY NEARLY A POINT FROM LAST WEEK
• EARNINGS SEASON DRIVING MORE VOLUME IN MICRO EMINI FUTURES

FUTURES OPTIONS FEEDBACK 

• QUESTION FROM SHUTDL: Nick still scalping his gold gamma?
• QUESTION FROM crypto messi: Is WTI SKEW usefull for directional trading?
• COMMENT FROM @trader1906 - It won't give you buy sell signals, I have modeled some skew bends that let you know moves are over done similar to the gold one I published but no holy grail.
• QUESTION FROM AZERAFEL: What is the best commodity market for options traders right now. Best mix of volume, volatility and liquidity? When is Nick coming back on the show?
• QUESTION FROM DAZZNE: Can you explain how the fedwatch tool actually works?

Topics this week include:

CME Group hits new OI record of 138.2M contracts.
Crude Oil

Equities

Ags

Metals

FUTURES OPTIONS FEEDBACK

Question from BOTB - What do you think of GOT this season? You feeling the hate like everyone else?
Comment from Docer - How tasty is that CME Bacon?
Question from Danan Ace - What’s the difference between realized and historical volatility?
Question from Tank - Will we see Eth futures soon. Also how are Ag options shaping up here?

Topics this week include:

Equities

Crude Oil

Metals/Gold

FUTURES OPTIONS FEEDBACK

Question from Desanya - Can you get the dairy folks on the show from CME? Also is CME planning to list more crypto anytime soon?

Question from LDC - There are rumors that CFTC is looking to approve ether futures. Can we expect an Eth offering from CME anytime soon?

Question from McIge - Has anyone ever put out an index with the top 5 or 10 names by market cap in the respective indices. Seems like you could get the lion's share of the move in big indices like SPY or SPX with just a few names.

Guest: Russell Rhoads

Topics this week include

Crude Oil

Metals/Gold

Equities/Russell 2000

FUTURES OPTIONS FEEDBACK

Comment from MCB - Took Dogecoin profits this morning. This crypto rally can't get much hotter!

Question from Lightcon - Why no brent love on the show?

Comment from Lachlan comport - Best options podcast full stop.

Question from Colby Alvarez - What is the weirdest print you’ve seen go up on this show?

Topics this week include:

Crude Oil

Ags

Metals/Gold

Equities/Russell 2000

FUTURES OPTIONS FEEDBACK

Question from DeSanya - Can you get the dairy folks on the show from CME? Also is CME planning to list more crypto anytime soon?

Topics this week include

Crude Oil

Metals/Gold

Ags/Soybeans

Equities/Russell 2000

FUTURES OPTIONS FEEDBACK

Question from JJack - What did Eric think of GOT? Did it live up to his report?

Question from Chickenassluvr - Do you know if there is anyway you can tell if positions are being opened or closed intra day? Live options open interest?

Question from Glen 00915249 - What I want to know is are copper futures about to break out?

Topics this week include:

Equities

Russell

eMini

Gold

Crude Oil

Topics this week include:

Gold

Silver

Copper

Ferrous Metals

Crude Oil

Topics this week include:

Metals: Gold, Copper

Crude Oil

Equities: Eurodollar

Ags

FUTURES OPTIONS FEEDBACK

Question from Jack T - Is it better to slip or slide when you’re trading skew?

Question from Tarry - Maybe include a paying the rent report on the TWIFO program or in the Quikstrike reports? Would be cool to know which names are paying the rent each week.

Topics this week include:

Equities/RVX

Crude Oil

Metals/Gold

Ags

FUTURES OPTIONS FEEDBACK

Question from Frank C. - There are so many Russell options products - can you break down the main differences between the offerings on the different exchanges?

Question from Level F - How far out can I trade RUT options? Looking for 2-3 yrs.

Topics this week include:

Crude Oil

Equities/Russell

Ags

Metals/Gold

FUTURES OPTIONS FEEDBACK

Comment from Options Game  Should be a nice TWIFO on Thursday. Ready to talk about Ags?

Question from FTTP - All the talk about skew is there any way that I can just buy or sell skew? Is it quoted anywhere as a product that I can trade - maybe Ag skew is high this week and I want to sell it, etc?

Question from Mark R. - Which version of QS has the slipping and sliding stuff?

Question from Tomas - Do all brokers offer futures options?

Topics this week include:

Metals/Gold

Crude Oil

Equities

FUTURES OPTIONS FEEDBACK PALOOZA

Comment from Olive Trader - A long straddle in gold didn’t work for me. You had good points about scalping. My loss has been really small, and I’ve had a few good trades going that this year.

Comment from Mark Bryant - I hope cannabis futures will be coming soon. I hope I can get options on cannabis futures.

Question from Nashly - Is there the same bias towards puts in most futures options that we see in equity options?

Question from Tag Analysis - What’s the difference between a slide and a shift when it comes to skew? Aren’t they the same thing?

Topics this week include:

Metals/Gold

Crude Oil/WTI

Equities/RVX

Crypto

Ags

FUTURES OPTIONS FEEDBACK

Question from Jose Morales - Why do you like trading opts on WTI instead of USO? USO can be traded in most accounts. Need a futures options account to trade WTI.

Question from Brett R. - Can you hit some FX on the show?

Question from George Pete - Russell 2000 gets all the love. What about futures options on 1000 or 3000? Or maybe some of the other indices under FTSE umbrella?

Question from Khariton - Was there ever a VIX RVX spread product? Thanks for TWIFO show.

Topics this week include:

Crude Oil

Metals/Gold

Ags/Hogs

FUTURES OPTIONS FEEDBACK

Question from Caesar L. - Why is palladium catching such a bid? Worth more than gold again?

Question from Model X - Ask the Russell guy which of the Russell products puts up the most contracts? Also when’s the move/shift stuff coming?

Question from Studio64 - Why don’t we see more flavors of equity volatility? There’s VIX and then there’s Eurostoxx and that’s pretty much it. There was talk of more on the horizon but nothing has come of it yet? I’d like more underlying indices other than S&P and more methodology than just the base VIX methodology (maybe some sort of skew product). Thoughts?

Question from Brandon Elliot - Have any good rules of thumb when trading the term structure in seasonal products like corn? Maybe a point when the spreads are just too wide or narrow and need to be traded? What’s typical holding period for these trades? Longer than a month? Thx for answering.

FUTURES OPTIONS FEEDBACK

Question from Franks - What’s the best entry futures option for newbies? I’m thinking something in the equities because most people are coming from stocks? I’d guess stuff like seasonal crop cycles would blow their minds.

Question from Behr12 - What do you guys think? I don’t think crude vol can sustain for long at these levels. - RE: Oil: Are Options Signaling Long-Term Uncertainty? https://www.cmegroup.com/podcasts/off-the-charts-podcast-series/oil-are-options-signaling-long-term-uncertainty.html

Question from J Swager - We stuck range bound in WTI for next few months between 48-55? Any signs in the vol that we might be heading for a move beyond in either direction?

Question from Bob Engles - Do all the synthetics that hold for eq opts like long stock/short call = short put also hold for futures options?

Question from Alcore - How far out can I go in eMini S&P or rut options? Does it make sense to do collars out to max expiration? Or maybe just a couple of years?

Question from The Poet - What does it mean when an options is delta skewed?

Question from Kaichi - You said all vertical trades were skew but what about calendars and diagonals? Isn’t that skew?

Comment from Steve A: Best series of shows about trading options on the net

Question from Opt Addict - I see a lot of talk about delta neutral trading using equity options but not so much with futures options. Why is that? Is it just not a popular strategy or is there a fundamental difference on the futures side that makes it less viable to dynamically delta hedge a position?

Topics this week include:

FX

Crude/WTI

Equities

Ags/Soybeans

Metals/Gold

FUTURES OPTIONS FEEDBACK

Question from Desinc81 - Are you buying that the FED is done for 2019 and maybe beyond?

Question from C Sanders - What do the options traders think about this development? Re: article - Palladium is worth more than gold for the first time in over a decade.

Question from Uncert1n - I’ve always heard the saying that when things get crazy correlation goes to 1. I know that holds for individual stocks and indices but does it also apply to commodities and other assets?

Question from Andrew Testa - Love the TWIFO and wouldn’t mind more Ag reports. Trying to learn that marketplace for myself. I’m still in the phase of trying to figure out the difference between El Nino and La Nina and which is good for Ags. Thanks for all your great shows. Enjoying the new Crypto Rundown.

Topics this week include:

Crude Oil

Equities

Metals/Gold

Crypto/Bitcoin

FUTURES OPTIONS FEEDBACK

Question from Neail P. - Cattle futures are moving. What are the options telling us?
Question from J Tomas - What do you think of soybean put skew here? Are they still biased toward the downside or has the concern mitigated? Any call love going forward?
Comment from DRI - Thx for this show. Enjoying it very much. Question from Leo Radjovic - Does the stock substitution strategy work the same with futures options as stock options? Can I still do fig-leaf strategy? Any things to pay attention to between the two? Question from Joel - What secrets does the skew hold for WTI right now? Where is crude oil headed oh skew swamis?

2018 Year-in-Review:

• Ags/Soybeans
• Nat Gas
• Equities/Russell
• Metal/Gold
• Cyrpto

Futures Options Feedback: Listener thoughts and musings

• Question from Jamal A. Lee - Thoughts on chance of BTC options listing in 2019?
• Question from Shasha3 - Biggest surprise of 2018? Any crazy expectations for next year?
• Question from Tarles - Concrete plans to bring back RVX in 2019? Seems like market makers would be interested in more volatility offerings these days?
• Question from C Tauck - Is this market whipsaw enough to make people rethink purely passive investing? Maybe they will consider an active allocation or perhaps even hedging themselves in 2019?
• Question from BBoy2 - What is the technical definition of a skew trade?
• Question from Burns - Is buying a call actually the best way to get long stock in this market?

Topics this week include:

• Rates
• Crude/WTI
• Equities/Russell
• Metals/Gold

Futures Options Feedback: Listeners take over

• Comment from MailManDan5 - I'm a buyer at $2,250. Know that market all too well. If it wants to fiddle down there I'll play ball, else it's not a great time to get back into crypto. Hopefully too many people didn't waste their time in 2018 on what was clearly a 2017 boon. Little piece missing here. Gold is rising now that #BITCOIN is falling. Little switch up in store of value happening here. Any bigger investors that decided to take the crypto plunge still playing it like it's a stock - it goes down enough and then pull out and reinvest elsewhere
• Comment from Giorgio - Volatility in the Euro/USD futures options is making OTM puts very cheap. Time for a quick risk reversal?
• Comment from Austyn41 - Good shows today. The experienced and animated host makes it very entertaining and interesting to listen to.

Topics this week include:

• Soybeans
• Crude Oil
• Nat Gas
• Equities
• Metals/Gold
• Crypto/Bitcoin
• Winners: KC Wheat, Iron Ore, Palladium
• Losers: Nat Gas, Rough Rice, E-Mini Russell 2000

Futures Options Feedback: Listeners take over

• Question from JLN7 -Is it safe to write calls in nat gas again?
• Question from Mainev -Didn't quite catch the logic of the guest last show re: equities strangles. How would selling strangles help you rebalance your equities portfolio? Thx for this. Also enjoying Options Playbook.
• Question from Neal J. - Does put-call parity work the same for futures options as it does for equity options? Thank you for all your free content.
• Question from Brandon Elliot - Have any good rules of thumb when trading the term structure in seasonal products like corn?
• Question from Oytrate - What is a reason that someone would write ITM covered calls? Seems like a waste of time to me since you're capping all of your upside.
• Comment from Kelly Lef - Thought the user tip to exercise deep ITM calls to save on the spread was a good one. So I checked a few of my stock replacement positions that had gone ITM. Turned out the spreads were fairly similar to the spread on the underlying stock index so the any savings were pretty small. Not really worth the hassle to go through the exercise process. Maybe I'm just trading a more liquid index than that listener or am I missing something?

Today's special guest co-host is Russell Rhoads, Formerly Dr. VIX and current Head of Derivatives Research at the Tabb Group.

Topics this week include:

• Crude Oil/WTI
• Nat Gas
• Equities
• Metals/Gold/Copper
• Ags/Soybeans

Futures Options Feedback: Listeners take the reins

• Question from Elleneals - Given the skew setup in equities with calls being cheaper than puts from a vol perspective why would you ever buy a collar? Why doesn't everyone always sell the skew and use bullish risk reversals? The market seems to be set up for it.

Today's guests are Jeff White, Executive Director, Energy Products & Services at CME Group and John Seguin, Former CME Member and Head Futures Coach for Market Taker Mentoring.

Topics this week include:

• Nat Gas
• WTI
• Crude
• CME OPEC Watch Tool
• Equities
• Crypto

Futures Options Feedback: Listener questions and comments

• Comment from Georgio - We need some options on #CMEG BTC futures.
• Comment from Mark Brant - Nat Gas skew is still way to the calls but a risk reversal could be on the horizon!
• Question from ChevCR - Is there ever a time when equity call skew is higher than put skew?

Topics this week include:

• Energy/Crude
• Equities
• Metals/Gold
• Rates
• Ags

Futures Options Feedback: Listeners take over

• Question from Mate7 - Good talk on ex. and settle on last show. I'm looking over the CME website option specs pages and I don't see many American style contracts. Why does CME use so many European contracts? Are they against early exercise?

Today's guests are Steve Stasys, Senior Director Agricultural Products, CME Group and Jared Caplan, Head of Commodities Trading, Akuna Capital.

Topics this week include:

• Ags
• Soybeans
• Corn
• Hogs (#hoglove)
• Nat Gas
• WTI

Futures Options Feedback: Listener questions and comments

• Question from NN76 - Found your show when searching for info on hog options. Like the #hoglove. Any tips for someone thinking about diving into these markets for the first time? I know they're pretty crazy.