For the first time in many months, Thursday, May 26th’s trading highlights included Brent oil seeing action up over $50, with crude oil just a shade below Brent. For those that have been bearish on oil for the past several years, this is a warning that maybe the oil recovery is already well underway. Both Brent and crude finished the regular trading day just under $50 per barrel, but with Brent breaching that important point earlier, a lot of momentum is on its side right now, and there’s a very good chance that this breach will happen again in the near future, and perhaps even end a trading day above $50. There have been plenty of hints and signs that a recovery was beginning, and this is by far the clearest signal that trader confidence has returned. It’s a momentous moment, albeit a lackluster one thanks to the fact that oil is still down more than 50 percent off of its highpoints.
What does this mean for your trading? If you are a binary options trader, it means that you should start looking less at put options for crude, and more at call options. For a couple years, put options have been the go to choice for binary options traders as oil has had very little stability. The price has dropped down below $40 per barrel many times, and even below $30 on occasion. Countries like Iran and Saudi Arabia have had to drastically rethink their production policies in order to keep their countries’ economies stable. For those trading in the traditional futures market, there has been little incentive to even try and create positions as no one has known with any degree of accuracy whether oil would fully recover, or when. There has been little incentive to purchase a futures contract because of this. That incentive is probably back right now, and it would not be a surprise to see oil volume jump considerably over the next few weeks.
As we have seen time and time again in almost every marketplace, a lot of the timing in a recovery comes down to the psychology of the people involved. And sometimes, all that needs to happen is one positive sign. That can get the ball rolling on a recovery, and it can lead to even more positive occurrences. There’s no guarantee that crude will keep climbing, but there’s now a better than 50 percent chance that the price per barrel will go up over $60 by the end of the calendar year. For those that have the account clout to enter a futures contract, now is a good time to enter the marketplace. For those that focus on the world’s most heavily traded commodity in the binary options marketplace, it’s definitely time to switch from a bearish strategy relying on put options to a bullish one relying on call options.
And it’s time for the average consumer to start paying more at the gas pump, too. The average Joe sees the price of oil going up as a bad thing because of this, but if you are involved as a trader, this is just part of the process. That’s one of the things that makes trading such a valuable skill to have. While many other people will see their cost of living go up when things like this happen, a skilled trader can actually use it to their advantage and make even more than what they are spending on transportation costs. This makes rising oil costs go from a hamper on your style of living to a wealth building tool, and it’s a great reason to start learning the basics of trading if you don’t already know them.