The upcoming 2024 US Presidential Election could have a significant impact on energy markets, particularly crude oil prices. With political policies and global trade tensions at the forefront, crude oil traders are anticipating a possible surge in WTI Crude Oil Futures. Recent analysis shows a potential price increase of over 40% within a year following the election, which could push the price of December 2025 WTI Crude Oil Futures (CLZ2025) from its current level of $67.80 to around $94.92.
To capitalize on this potential price breakout, we present a Breakout Booster Play using options on Crude Oil Futures. This strategy allows traders to take advantage of the bullish momentum expected after the election, while also managing downside risk.
Technical Analysis of Crude Oil Futures
In our analysis, the 61.8% Fibonacci retracement level lines up perfectly with a UFO support zone at $55.62, making it a key area where buying interest could emerge. This strong support level, combined with the current market price of $67.80, indicates the possibility of a substantial bullish move post-election. A 40% increase could push prices up to $94.92, while even a conservative target of 20% could lead to prices reaching $81.36.
This technical analysis sets the stage for an options strategy that leverages these support levels while offering a buffer against potential downside risks.
The Breakout Booster Options Strategy
This Options Blueprint focuses on using both puts and calls to benefit from the expected upside. Here’s how the trade is structured:
- Sell 2 Puts at the $55 Strike (Expiring November 17, 2025):
- Collect a premium of $3.27 per contract, totaling $6.54 for selling two contracts.
- This allows the trader to profit if crude oil stays above $55, while creating a buffer for downside risk.
- Buy 1 Call at the $71 Strike (Expiring November 17, 2025):
- Purchase a call for $6.28 to benefit from a price breakout above $71, giving unlimited upside potential.
The net cost of this strategy is a small credit of $0.26, meaning the trader gets paid to enter the position. Break-even is set at $54.87, and substantial profits are expected if crude oil rises above $71.
Profit and Risk Management
Profit Potential:
- If crude oil prices rise to $94.92, the strategy could generate significant profits, as the long call would be deep in the money.
- Even a more conservative move to $81.36 offers strong profit potential, especially given the limited upfront cost.
Risk Considerations:
- The strategy has a 19% buffer before losses occur, as break-even is set at $54.87.
- However, traders must manage the risk of holding short puts. If crude oil prices drop sharply, margin calls may occur before expiration. Theoretical losses could be unlimited if the position is closed early, so active monitoring is essential.
Risk management tools such as stop-loss orders, rolling options, or protective puts should be considered to reduce exposure in the event of a market downturn.
Crude Oil Futures Contract Specs and Margins
WTI Crude Oil Futures (CL):
- Contract Size: 1,000 barrels per contract.
- Tick Value: $10 per 0.01 movement in price.
- Initial Margin: Approximately $6,100 per contract (subject to change).
Micro Crude Oil Futures (MCL):
- Contract Size: 100 barrels per contract (1/10th the size of standard WTI futures).
- Tick Value: $1 per 0.01 movement in price.
- Initial Margin: Around $610 per contract, making this an attractive option for smaller traders.
Conclusion: Capitalizing on Post-Election Crude Oil Trends
This Options Blueprint Series highlights a strategic approach to profiting from the potential post-election rally in WTI Crude Oil. By combining short puts with long calls, traders can take advantage of a significant upside move while maintaining a buffer against downside risk.
As always, traders must manage their positions carefully, especially in volatile markets like crude oil. With appropriate risk management techniques, this strategy could offer a powerful way to capitalize on the energy market's reaction to the 2024 US Presidential Election.
For more advanced trading tools like AutoUFOs® or AutoClimate™, which can enhance your market analysis, and to learn more about our trading courses, visit www.tradewithufos.com.
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TRADDICTIV · Research Team
