FxWirePro: Short WTI crude futures or arbitrage

Trade tips: Commodity futures and options

Weekly technicals suggest still a healthy sell indications as RSI remained well below 30 levels (overbought region) and signaling downward convergence with the slumping prices (currently RSI 14 trending at 22.5299), while slow stochastic has halted in oversold territory since mid July and attempting for & %D crossover (currently %D line at 3.1816 & %K line at 3.0345). The prevailing slumps with volume confirmation are quite below 10 day moving averages that show the long term direction is still towards south. So overall we don't see any sort of strength in this commodity that can pull back from current levels.

So from current levels keeping speculation mindset we recommend shorting near month futures for target towards $39.50 levels. Light Sweet Crude Oil (WTI) futures and options are the world's most actively traded energy product. WTI plays an important role in managing risk in the energy sector worldwide because the contract has the most liquidity and most transparency.

If puts are overpriced relative to calls, the arbitrager would sell a naked put and offset it by buying a synthetic puts. Similarly, vice versa when you think calls are getting overpriced in relation to puts.