Not sure exactly yet which rations are optimal, and the way I plan on doing this, I will add when things go against me.. primarily on the XOM leg. Long USO Short XOM And I'm thinking if I want to go long another refiner, as a hedge. Perhaps WNR? But that stock has more than doubled, a very high premium if you will. I expect XOM to break down out of its channel, and USO to stay flat or grind slightly up or down, but no sharp down movement. I'm curious as to others thoughts on my trade here, and how it might be structured.
I have always enjoyed your post but if I am correct this is a pair trade you are putting on but what is your main reason for this? XOM has continued to burn folks who short it and they are much more than just in the refinery business..USO is purely a oil and related only spot price play and XOM is not....help me understand more as I am interested in your analysis...thanks...the pairs I put on have a "heavy" correlation and these two don't so I want to understand the trade? As well, how to you factor the dividend xom pays?