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April 24th, 2020 Newsletter

With the recent volatility across markets, we have seen margins increase in some markets as well as wild swings and extreme volatility in many markets. For some, it can cost the full account value but doesn’t need to. These volatile times require MAJO

April 24th, 2020 - Issue #1003

In This Issue

1. Trading 102: Resources to help you navigate these trubulent times
2. Hot Market Report: Crude Oil negative prices and more...
3. Economic Calendar

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1. Trading 102: Resources to help you navigate these trubulent times

Important NOTE: With the recent volatility across markets, we have seen margins increase in some markets as well as wild swings and extreme volatility in many markets. For some, it can cost the full account value but doesn’t need to. These volatile times require MAJOR adjustments in how you approach trading and risk management. The resources below can help:

About limit moves and circuit breakers
About negative crude oil prices
Expect the unexpected
View 8 Steps to Better trading
View Top 50 Trading Rules
Complete your Trader's Profile
Request a Commissions Quote
Request a Margins
Ask us a Question

Good Trading!

2. Hot Market Report: Crude Oil Futures...Negative Prices and more

By Ilan Levy-Mayer, VP

Click on image below to enlarge

CL futures;

This week’s highlighted Market is Crude Oil. Crude Oil is part of the energy sector along with "it's" brothers "RBOB - Unleaded gas" and heating oil and cousin, natural gas. All traded on the NYMEX/GLOBEX exchange.


Back on January 8th, 2020, West Texas Crude Oil reached $65.65 per barrel on news that Iran fired more than a dozen ballistic missiles at two Iraqi military bases housing US troops in retaliation for the US targeted killing of top Iranian military commander Qasem Soleimani. Four months later – and for the first time ever – the price of crude oil for May delivery traded below zero, closing on Monday at -$37.63 per barrel. So much has been written about crude oil trading to a negative value, so I won’t waste more space on that, however here are some pointers I like to make:
1. The margins have more than doubled these past few weeks and many clearing houses will even ask for 200% margins if you trade the front month.
2. Volatility is EXTREME, make sure you know what you are doing, know the rules and understand the environment. There is a big difference in the way the front active month trades compared to the back months.
3. If you’ve never taken physical delivery of crude oil and all of a sudden this idea has sprouted in your brain, take heed. Don't think you can get set up for that scenario in short order – in case June repeats the same behavior. Taking delivery of crude oil requires a rather lengthy set-up process. The minimum account balance required to be in place: $1,000,000 ( with us anyway ). You also will be required to be set up with a licensed storage facility, provide verifiable shipping logistics and be approved by certain FCM’s and the exchange
4. This is the type of trading environment where an experienced broker can assist you by suggest strategy ideas such as placing hedges, incorporating options, implementing spreads and much more.
To access a free trial to the ALGOS shown in the chart visit and sign up for a free trial for 21 days with real-time data.

On a different note, Crude Oil futures are fastly becoming one of the more popular contracts for day-trading as volatility, speed, price fluctuations are all there for the double edge sword, day-traders love.

Keep in mind that the GLOBEX/NYMEX also offers the mini Crude oil contract which is half the size and may be a good alternative for smaller/ begginer traders.
MINI Crude Oil Futures Specs
Hours: 5:00 PM to 4:00 PM next day PM Central Time
Margins: $4150 initial, $3850 Maint. ( as of the date of this newsletter)
Point Value: full point = $500 ( Example: 62.80 to 63.80 ). Min fluctuation is 0.25 = $12.5 ( Example: 61.80 to 61.825)
Settlement: Cash Settled commodity one day prior to the Big Contract

Months: Monthly cycle, All Months

Crude Oil Futures Specs
Hours: 5:00 PM to 4:00 PM next day PM Central Time
Margins: $9300 initial, $8500 Maint. ( as of the date of this newsletter)
Point Value: full point = $1000 ( Example: 71.80 to 72.80 ). Min fluctuation is 0.1 = $10 ( Example: 71.80 to 71.81)
Settlement: Physical, deliverable commodity

Months: Monthly cycle, All Months

Weekly Options:YES
Crude Oil is one of my favorite markets for Day Trading because of the intraday voilatility and movements. Be careful, these factors can work against you or in your favor.
Some of the basic fundamentals to keep in mind when you are considering a trade in the crude oil as well as other energies:
1. Longer term view of current market prices
2. Dates and times of important reports. Namely, Tuesday afternoon report (API) and the DOE report on Wednesday mornings at 10:30 Am EST
3. Weather and Seasonality
4. Correlation to US Dollar prices
5. Inflationary prospects
6. Geopolitical Stability
7. U.S. Fiscal and Monetary Stability

Our brokers here at Cannon will be happy to chat about the crude olil market, other energies, other futures, options, futures spreads and much more! Feel free to contact us at any time.

3. Economic Calendar

Source: Moore Research Center, Inc.

Date Reports Expiration & Notice Dates
04/24
Fri
7:30 AM CDT - Durable Goods-Ex Transportation(Mar)
7:30 AM CDT - Durable Orders(Mar)
9:00 AM CDT - Univ of Mich Consumer Sentiment-Final(Apr)
2:00 PM CDT - Cattle On Feed
FN: May Cotton(NYM)
LT: Apr Bitcoin(CME)
May 2,5,10 Year Notes Options(CBT)
May Bonds Options(CBT)
May Canola Options(CBT)
May Wheat Options(CBT)
May Corn Options(CBT)
May Oats Options(CBT)
May Rough Rice Options(CBT)
May Soybeans,Soymeal,Soyoil Options(CBT)
04/27
Mon
3:00 PM CDT - Crop Progress
 
 
 
LT: May Copper Options(CMX)
May Gold & Silver Options(CMX)
May Natural Gas Options(NYM)
May RBOB & ULSD Options(NYM)
04/28
Tue
8:00 AM CDT - S&P Case-Shiller Home Price Index(Feb)
9:00 AM CDT - Consumer Confidence(Apr)
3:30 PM CDT - API Energy Stocks
 
LT: Apr Copper(CMX)
Apr Gold & Silver(CMX)
Apr Platinum & Palladium(NYM)
Apr Butter & Milk(CME)
May Natural Gas(NYM)
Apr Butter & Milk Options(CME)

04/29
Wed
6:00 AM CDT - MBA Mortgage Index
7:30 AM CDT - Chain Deflator-Adv(Q1)
7:30 AM CDT - GDP-Adv(Q1)
7:30 AM CDT - GDP Deflator(Q1)
9:00 AM CDT - Pending Home Sales(Mar)
9:30 AM CDT - EIA Petroleum Status Report
1:00 PM CDT - FOMC Rate Decision
2:00 PM CDT - Dairy Products Sales
FN: May Natural Gas(NYM)
 
 
 
04/30
Thu
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
7:30 AM CDT - Employment Cost Index(Q1)
7:30 AM CDT - PCE Prices(Mar)
7:30 AM CDT - PCE Prices-Core(Mar)
7:30 AM CDT - Personal Income & Spending(Mar)
8:45 AM CDT - Chicago PMI(Apr)
9:30 AM CDT - EIA Natural Gas Report
3:30 PM CDT - Money Supply
FN: May Copper(CMX)
May Gold & Silver(CMX)
May Platinum & Palladium(NYM)
May 2,5,10 Year Notes(CBT)
May Bonds(CBT)
May Wheat(CBT)
May Corn(CBT)
May Oats(CBT)
May Rough Rice(CBT)
May Soybeans,Soymeal,Soyoil(CBT)
LT: Apr Black Sea Wheat(CME)
Apr Fed Funds(CME)
Apr Live Cattle(CME)
Apr Feeder Cattle(CME)
May RBOB & ULSD(NYM)
May Sugar-11(ICE)
Apr Black Sea Wheat Options(CME)
Apr Fed Funds Options(CME)
Apr Feeder Cattle Options(CME)
May Lumber Options(CME)
05/01
Fri
9:00 AM CDT - Construction Spending(Mar)
9:00 AM CDT - ISM Manufacturing Index(Apr)
1:00 PM CDT - Auto & Truck Sales(Apr)
2:00 PM CDT - Cotton System
2:00 PM CDT - Fats & Oils
2:00 PM CDT - Grain Crushings
FN: May Orange Juice(ICE)
May Sugar-11(ICE)
LT: May Live Cattle Options(CME)
Jun Cocoa Options(ICE)
05/04
Mon
9:00 AM CDT - Factory Orders(Mar)
3:00 PM CDT - Crop Progress
 
 
FN: May RBOB & ULSD(NYM)
 
 
 
05/05
Tue
7:30 AM CST - Adv Intl Trade In Goods(Mar)
7:30 AM CST - Adv Retail Inventories(Mar)
7:30 AM CST - Adv Wholesale Inventories(Mar)
7:30 AM CST - Trade Balance(Mar)
3:30 PM CST - API Energy Stocks

 
 
 
05/06
Wed
6:00 AM CDT - MBA Mortgage Index
7:15 AM CDT - ADP Employment Change(Apr)
9:30 AM CDT - EIA Petroleum Status Report
2:00 PM CDT - Dairy Products Sales
LT: May Cotton(NYM)
 
 
 
05/07
Thu
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
7:30 AM CDT - Productivity-Prel(Q1)
9:30 AM CDT - EIA Natural Gas Report
2:00 PM CDT - Consumer Credit(Mar)
3:30 PM CDT - Money Supply

 
 
 
FN=First Notice, OE=Option Expiration, LT=Last Trade

Disclaimer: This calendar is compiled from sources believed to be reliable. Moore Research Center, Inc. assumes no responsibility for any errors or omissions. It is meant as an alert to events that may affect trading strategies and is not necessarily complete. The release dates for certain economic reports may have been rescheduled.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

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