http://www.options-trading-education.com/24206/can-you-make-money-with-oil-options/
Can You Make Money with Oil Options?
Nearly a year ago we suggested that you can make money with oil futures options. It turns out this advice was correct. If you had purchased puts on crude oil futures or stocks in the oil sector in July you would have made money between then and now. But, can you still make money with oil options? The Wall Street Journal reports that oil prices rise as traders wait for supply reports.
Oil prices rose Tuesday, paring earlier losses, on expectations that growing U.S. production and crude stockpiles are both near their peaks. Light, sweet crude for May delivery recently rose 24 cents, or 0.5%, to $52.38 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, traded down 5 cents, or 0.1%, at $58.07 a barrel on ICE Futures Europe. Prices fell in early trading as the dollar strengthened against a basket of other currencies. Oil is traded in dollars, and a stronger dollar makes oil less affordable to buyers using foreign currencies. However, prices erased those losses and moved higher as traders focused on upcoming inventory data.
Inventories are high and economies across the world are weak. Nevertheless the Saudis are raising their prices for Asian customers. Can you make money with oil options? You can if there is enough market volatility.
Oil Price Determinants
USA Today asks what determines if oil prices go up or down. If you get this part right you can make money with oil options.
It appears as if oil prices could be on the verge of a rebound, with new data showing that the U.S. oil patch is hitting an inflection point. While specific shale regions – such as North Dakota’s Bakken and Texas’ Eagle Ford – have posted production declines, overall U.S. oil output managed to edge up in recent months.
But now that U.S. production has finally dipped, it may augur a new phase for oil markets in which production cutbacks could lead to higher prices. The Energy Information Administration reported on April 1 that total U.S. oil production fell for the week ending on March 27, falling 36,000 barrels per day to 9.38 million barrels per day.
The prior week’s production level of 9.42 million barrels per day was the highest level in three decades. If output continues to decline, mid-March 2015 could mark the peak of U.S. oil output, at least for the foreseeable future.
Because the price of oil is low oil exploration has dropped off and eventually so will US production. This will lead to higher oil prices. However, Iran may start exporting oil again if talks regarding their nuclear aspirations succeed. That would create a greater glut in the oil market and lower prices. Can you make money with oil options? You can if you can see how these factors play out.
When Iran Starts Exporting Again
Reuters predicts a long bear market in oil as Iran gets ready to export.
4. http://www.options-trading-education.com/24206/can-you-make-money-with-oil-options/
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