Commodity Breakout Trade: EMA + Fib Pullback With Protective Put

Why this setup

This guide applies our commodity breakout rules: align price above the 20/50 EMAs, buy near the 0.5 Fib retracement, and pair the core long with a protective put (see protective scenarios in our strategy). It works for both futures ETFs and sector equities that track the same narrative.

Core checklist

• Trend alignment: Price above EMA20 and EMA50; ideal stack is 20 > 50 > 100.
• Pullback zone: Price sits near the 0.5 retracement (acceptable 0.382–0.618).
• Range compression: Last 10 bars inside ~5% range.
• Risk cap: Long stock/ETF or call + protective put at/below Fib zone low.
• Greeks to watch: Delta for participation, Gamma into the breakout, Vega around catalysts.

Trade structure (mirrors strategy.md)

1. Enter long near the Fib midpoint while the EMA stack stays bullish.
2. Buy a protective put at or just below the Fib zone low.
3. If thesis holds: sell the put at the Fib midpoint; ride the long to the top of the zone (61–100%).
4. If breakdown: sell the long on a close below the zone low; keep the put briefly as it gains delta, then exit near the next lower zone.
5. If flat/chop: exit both legs to avoid theta bleed and redeploy.

Where we apply it

• Energy (Crude Oil): XOM, CVX, OXY and services (SLB, HAL, VAL) tracking WTI pullbacks on USO/WTI structure.
• Metals (Gold / Silver): NEM, AEM, GDX, SLV following GC/SI Fib retracements.
• Base Metals (Copper): FCX, SCCO, BHP, RIO aligned with HG or CPER pulls.
• Agriculture (Soybeans / Grains): ADM, BG, DE, CORN/WEAT when ZS/ZC retrace to 0.5 with EMAs stacked.

Position sizing & exits

• Risk per trade: Sized so put + long loss ≤ planned R.
• Profit target: Top of the active Fib zone; trail optional once above 0.618.
• Invalidation: Close below Fib zone low or EMA20 loss + Fib breach.

Quick execution notes

• Prefer daily bars for trend definition; 4H for entries.
• Avoid entries ahead of major reports (EIA/DOE for energy, WASDE for grains, CPI/FOMC for metals).
• Recheck Gamma and Theta if using short-dated calls; widen time if decay is steep.
• If volatility crush risk is high, scale the put closer to the money; monitor Vega.