As I’ve mentioned in recent issues, oil had near-term targets of $70 in its sights. It hasn’t disappointed, shooting past the $73 mark late last week – a level not seen since the first week of November 2008.

On a technical basis, because oil has not only moved above, but also stayed above all the major moving averages (including the all-important 200-day average), it’s now got $80 in its sights. If any pullback is going to occur, which should happen after solid runs like this, the move down should hold at the $65 per barrel range.

On a fundamental note, we’ve got three reasons for the recent price rise…

1. Hedge funds seem to be pumping more money into the market again.
2. OPEC has decreased oil supply levels.
3. There seems to be some consensus that oil demand might be picking up from the slack levels seen over the past six months.

For now, the market looks strong and any pullbacks should be met with more buying. Here’s how you can play it…

How To Play Oil With Minimum Fuss

The chart below shows the daily movements of the front-month futures contract (July)…

The easiest way to play the broad oil market (either to the upside or downside) is to go for the very popular and highly liquid exchange traded fund, United States Oil (NYSE: USO). The fund mimics the moves of crude oil futures that trade on the NYMEX.

You can trade USO like a normal stock in a regular stock brokerage account and the ETF has options contracts available, too.

Since we first went bullish on oil, USO traded around $32. It’s now around $38.80 and is a very effective “cheaper” alternative to the high-priced arena of futures and futures options, while still profiting from the same moves as the underlying oil market.

Natural Gas Making Unnatural Moves

Having been stuck in the doldrums for ages, the natural gas market has really woken up recently.

Prices have coiled into a narrow trading range over the past two weeks, with volatile swings of 300-400 points over just a few days becoming the norm. At the moment, it looks like the $3.50 per MMB/tu level is the floor, while the market tries to decide which way it eventually wants to go.

Keep Tabs On The 20-Day Moving Average For Clues To The Next Move

With natural gas prices still sitting near multi-year lows, we continue to have a bullish longer-term perspective.

Also, I’ll reiterate a technical observation from my last issue: Because the 20-day moving average has crossed above the 50-day moving average for the first time since July 2008, this usually leads to a change in direction.

However, as volatile as natural gas is, the 20-day MA is flirting with crossing back underneath the 50-day MA, unless natural gas can muster a convincing move above the $4.000 per MMB/tu level.

We still like natural gas on the long side, but be patient here. This is a real, in-demand natural resource commodity, so it never has the worry factor of going out of business or bankrupt.

You can participate in this market by using the equivalent ETF for natural gas - United States Natural Gas(NYSE: UNG), which reacts just like the futures and futures options do. If you’re considering bullish strategies, UNG offers options contracts as well.

When Inflation Hits, You Want To Be Invested Here

The financials markets and investing can be a highly divisive subject… but most people agree on one thing:

Interest rates and inflation will rise eventually (in fact, rates have already started to rise), while the U.S. dollar will fall. This will be in response to the huge debt that the American government is getting itself into, due to the financial crisis and bailout programs.

Scenarios like this have always led to bullish moves into commodities, as they can buffer the effects just mentioned above. Witness the bullish moves in virtually every commodity sector that began in earnest a few months ago.

One of the best places to be in order to protect yourself from inflation is the metals markets. In fact, gold and silver have fared exceptionally well since the end of 2008 – and haven’t looked back since.

Our technical levels have served us well, allowing us to spot the support areas for both metals – gold near the $880 per ounce level, while solid support for silver comes in at $12.000 per ounce. Both have bounced from those areas and have enjoyed strong moves.

Although both metals are currently seeing slight pullbacks, they should resume their upward marches toward $1,000 and $20 for gold and silver respectively.

You can trade gold and silver directly through the futures options that trade on the NYMEX. Or if you prefer regular stock and options-based plays, check out their respective ETFs – the SPDR Gold Shares (NYSE: GLD) and iShares Silver Trust (NYSE: SLV).

Source:Three Reasons Why Oil Prices Are Rising… And Where They’re Headed Next

So much for history.

It makes more sense to focus on the present – and that means taking what the market gives us. With commodities, that’s a hearty dose of volatility…

Another Chance To Go Long On Natural Gas

The natural gas market giveth and then taketh away.

We’ve been bullish on the natural gas market since the price hit a long-term support level near the $4.500 per MMbtu mark a few months back. Since making a new low price of $3.740 (based on the May 2009 futures contract) on March 18, the futures blasted higher by 1,000 ticks and reached a high of $4.750.

But with a surprise Energy Information Administration report last Thursday, which showed a much larger buildup of underground natural gas supplies, the market has sunk right back to its lows of $3.750 per MMBtu.

Although we’re a little disappointed with the current state of this market, we continue to like natural gas for the very long-term – particularly as hurricane season creeps closer and the risk of damage to natural gas operations in the Gulf heightens.

If you’re thinking of initiating bullish trades, you can do it through the natural gas futures options market on the NYMEX, or on the market’s main ETF – the United States Natural Gas Fund (NYSE: UNG).

A Wide Range For Crude Ahead

Crude oil continues to swing in large ranges.

The May futures contract just hit a near-term high of $54.66 per barrel – a significant jump from its low of just under $40 last month. But with a bout of profit-taking in the mix, the contract’s 20-day moving average has moved to support near $49 per barrel.

Depending on the mood of the market, we could see oil hold at this level and head higher again. If it doesn’t hold, though, we could see a drop back down to $40 very quickly.

Regardless, our near-term trading range for oil continues to fall between $30 and $60 a barrel.

Metals Pause For Breath… But Get Ready For The Next Move Higher

With gold and silver having recently tagged highs ($1,000 per ounce for gold and $14.50 per ounce for silver), both have taken a bit of a breather and retraced some of their gains.

This kind of profit-taking is perfectly normal – and is actually a good thing, as it gives the markets a chance to consolidate in preparation for the next leg higher. We still believe this will happen.

For gold: We don’t see the front-month futures contract (June) trading much below $870 per ounce after the current pullback is over.

For silver: We shouldn’t see a price much below $12 an ounce for the May contract.

With the stock markets still unsteady, many investors are sticking with metals as part of a diversified portfolio.

Aside from using limited-risk option strategies to play gold and silver futures options on the COMEX market, you can buy outright shares of the ETFs that track the price performance of gold and silver – the SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV) respectively. You can also play options on these ETFs.

Could Winds Whip OJ Into A Bullish Frenzy?

Keep an eye on the orange juice market. It’s definitely bounced off its yearly lows near $.65 per pound and has trended higher to its current price of $.77 per pound.

Orange juice is a market that heats up towards the late spring/early summer – and is then on full “hurricane watch” from June until November. We’ll continue to post the monthly chart of orange juice as a reference point of where it’s been before – and could potentially go again.

That’s all for this edition. Catch you next time.

Source: Natural Gas: Another Chance to Profit As This Commodity Takes a Tumble

Karim touched on the topic in yesterday’s column, but I want to give you a full rundown on how this simple strategy works. And to do so, I’ve enlisted the help of the master… my colleague, Lee Lowell.

Lee has used put option selling to profitable effect in our Xcelerated Profits Report newsletter and, even more impressively, in his Instant Money Trader (IMT) service, which focuses exclusively on it.

In fact, since Lee launched IMT last autumn, he hasn’t had a single losing recommendation. Let’s see how it’s done…

Put Option Selling – Busting The Myths

If you’ve got this far, you’re on the right track. Many investors hear the words “put” and “selling” in the same sentence and head for the exit. Too complex. Too confusing. And downright scary. Or so the myth goes.

Let’s bust that myth right away. Put option selling isn’t difficult to execute. In fact, it’s actually easier than most investment methods.

When you place a put-sell trade:

• You don’t have to buy a stock.
• You don’t have to sell a stock.
• It’s got nothing to do with bonds or currencies.
• And there are no complex parameters to the trade.

Here’s the deal: You’re either going to make money, or you’ll end up investing in a company at a ridiculously low, discounted price.

What you try to do is buy stocks for the price you want. And just for trying, you get paid for it.

It works in rising markets… falling markets… flat markets… any market. It’s a regular stock-buying strategy with a profitable twist upfront. Here’s how it works…

How To Execute A Put-Sell Trade

Ever wanted to buy a stock, but passed because the price is too high for your liking?

Most ordinary investors would simply sit on the sidelines and wait for the price to fall to a better level. But smarter investors know they can still get in the game by selling a put option on it instead. All you need to do is…

• Pick your chosen stock.
• Decide on a lower price, where you’d feel comfortable buying the shares.
• Check the put option prices for that level. For example, if the stock is trading at $20 and you want to buy it for $15, you’d select the $15 strike price and an expiration month.
• You then sell those put options. Since each stock option contract is equivalent to 100 shares, you’d sell five put option contracts if you want to buy 500 shares.

When you enter a trade like this, you’re obligated to buy those shares at your stated strike price by expiration. Keep that in mind when selling the contracts, so you don’t over-extend yourself. For example, if you sell one $15 put option contract, you’ll need to have $1,500 on hand by expiration day to cover the cost of the shares ($15 x 100 = $1,500).

Note: You don’t need to have all that money on hand while the trade is open. Your broker will only ask you to keep a fraction of that amount available – known as a “margin requirement.” Consider the trade as a “buy now; pay later” type of deal. You’re putting off paying for the stock until a certain scenario occurs (see below).

In exchange, the option buyer will pay you for each contract you sell while you wait. This is known as a “premium” and is deposited into your trading account (the farther out the expiration date, the more money you’ll receive when selling the option). Meanwhile, ordinary investors are just waiting for the price to drop without collecting any money.

Okay, then what happens?

What To Expect on Options Expiration Day

On options expiration day, you’ll have two scenarios:

If Your Stock Trades Below $15:

• For every put option contract you sold, you’ll be obligated to buy 100 shares at $15 each. This is what you wanted – a 25% discount from its $20 price when you executed the trade.
• Plus, you get to keep the money that the option buyer paid you.
• The shares will appear in your account on the Monday after option expiration. It will now be a regular long position and you must manage it as you would do for any other stock. That’s why it’s important you pick a price at which you’re comfortable holding the shares.

If Your Stock Trades Above $15:

• The put options will expire worthless.
• You won’t get to buy the shares at your chosen price, but you will get to keep the money for selling the contracts, just for trying.

So regardless of what happens, you keep the money from selling the put options upfront. Now let’s bust another myth…

Selling Put Options – No Riskier Than Stocks

Selling put options is no riskier than buying shares outright. When you buy shares, the risk is that you lose your entire investment. When you sell a put option, you’re obligating yourself to buy shares, too… but at a much lower level than the current share price. And if you do end up buying the shares, your risk will be the same a regular shareholder.

The difference is that nobody pays you cash to buy stocks outright – but they do when you sell put options. Selling puts is just another way to invest using the options market.

While some brokers see selling put options as riskier than stocks (and require that you keep more capital reserves on hand), your risk only kicks in if you’re obligated to buy the shares. And even then, you’d simply be long on the stock, with the same risks as with any stock.

Of course, the worst-case scenario is that the stock falls to zero. But brokers never seem too restrictive when investors buy shares outright, rather than options.

An Important Note On Selling Put Options

Many folks don’t know about strategies like put-selling. But we wanted to bring this pro strategy to your attention as an example of what’s working in the market right now. We all have to adjust and adapt to the new realities facing us.

That said, selling puts isn’t necessarily for everyone. You’ll need to check with your broker to make sure you’re approved to trade options – and specifically, selling put options.

But if you want to take advantage of today’s financial mess to implement one of the best investment strategies for a market like this,  then check out Lee’s Instant Money Trader, which is dedicated exclusively to selling put options.

And rest assured, Lee is not a gambler. In fact, he’s one of the most conservative, risk-averse investors I know. He only looks at trades that have a high probability of success – as his track record proves. Give it a risk-free, no obligation look and see what you think.

Source: Put Option Selling: How To Buy Stocks At A Discount & Get Paid For It

You can see that corn looks ready to challenge its recent high — and on rising volume, too.

Now for the fundamentals behind this chart. The soil in parts of the country is too cool and wet for corn. This forces corn farmers to replant. Some investors think it will also force farmers to switch to soybeans (which can be planted later than corn), and maybe 10 or even five years ago, it would have. But nowadays, with farm suppliers practicing “just in time” inventories, farmers would have trouble finding the seeds for such a switch.

And too much rain means that farmers have planted only about 10% of the corn crop, compared with 20% at this time a year earlier. Over the past five years, the average for the date has been 35%.

Globally, corn supplies are already straining to meet demand. America is the world’s king of corn. If our crop is going to be light, that puts corn on the launch pad.

You can play corn with an exchange-traded fund: Corn is one-fourth of the holdings of the PowerShares DB Agriculture Fund (DBA:AMEX). The other parts are wheat, soybeans and sugar. But to really ride this agricultural rocket, futures or futures options are the way to go.

Be sure that any trade fits your risk profile, and run ideas past your investment advisor.

Good luck and good trades,

The Secret Order of Jurojin

Editor’s Note: The Secret Order of Jurojin of Taipan Publishing Group