Make gobs of money selling crude oil options (and other commodity options).

Smacked another single today.

I sold a put option yesterday on Natural Gas. The stuff was on a down-cycle and had found obvious support at about 7600.

I sold the 7500 put option for 1050, betting that it wouldn’t go below 7500 and the option was quietly expire with me keeping the premium in my pocket.

Instead, natural gas shot up this morning, so I bought the option back at 96. That’s a net profit of over $500 in less than 24 hrs.

I’ll take that and call it a hit.

Well, I sold my first oil option this week. I sold the July $66.00 call as oil seemed to be peaking just below that price.

I figured it would peak just about at that price, then go thru a 1-week downcycle and by the time it rebounded my option would have expired.

Instead, the down-cycle seemed to be happening too fast. Instead of waiting to see it change it’s recent pattern, I bought back the option for much less than I paid for it.

Sold it for $1050 and bought it back in 3 days for $500.

It’s not exactly what I had planned, but I’ll take it and call it a moderate success.

For many years I have had great success writing covered calls in the stock markets.

The basic strategy (in abstract terms) is to harvest risk (volatility), package it in neat bundles and sell it to other investors looking for risk (quick, easy profits). I sacrifice higher profits for less risk and I aim for a monthly 5%-6% gain.

Now I want to move this strategy to the commodities markets, where there is more volatility that is not as cyclical (ie, always volatility).

So far so good. Wrote my first option last week with 2 weeks remaining duration. It will expire next Friday and I’ll have a pretty 1-week gain.