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For: Tuesday 05-25-2010

Oil Rebound

The energy market has given back almost a year’s worth of gains. I have the July contract trading above longer term support and just a few bucks shy of resistance. If we get a turnaround in here we will look at buying ratio call spreads. A close above the recent spike low will show a possible bottoming formation.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: On a close back above 7250 versus the July futures before the end of the week. Buy the July 7500 and sell two 8100 calls for a debit of 90 points on a limit. Risk 150 points on the trade. (>$1500 not including commissions and fees), Look to take profits if the futures trade to 7750.