Shorting crude oil - USO/USL

Discussion in 'Trading' started by luckylee, Aug 2, 2011.

  1. Oil looks like the weakest link of all the commodities ... how about shorting it with USO puts ?

    There's also 2x short - DUG (oil companies) and DTO (crude oil itself).

    Chart looks good, time to short oil.

    One of the reason this could be a very profitable trade - Obama started to scapegoat oil traders - means that they are going to interfere with crude oil pricing. Why was there SPR release the other day? It's close to election time. In general, people think that oil is too expensive and to win the heart of the people, Obama will want to manipulate the oil price lower.

    In general, here's how most people on this planet think:
    Stock up + oil low = good
    Oil up + stock down = bad

    How to profit from this? Simply short oil. In my opinion, I believe Obama will do whatever it takes to win the election :)
  2. the 1x shorts: DDG (companies) and SZO (crude)

    Jan 2012 USO $30 put looks cheap
  3. If you really believe in your analysis, get on the CL futures contract and short away! At $10/tick you are rewarded handsomely if you are right.
  4. As a part of my risk management, I'm not going to touch CL future ... just USO puts.

    You will be rewarded handsomely.

    You see - it's not about supply/demand, it's about election time and what it takes to win the heart of the people :)

  5. if you wanna lose your pants and everything..
  6. Oil failed the breakout, boys.

    Check it out .. it's going back to at least $75 and possibly $50. Obama will want to win the election.

    Besides, the slippage due to rolling in USO/USL should be taken to your advantage (if you know what I mean). They will never reach their high again. These ETFs are derivatives created to take money from retail traders like you and I. I went long UNG once... :)

    You will not profit by going long USO/USL. It's a deadend trade.

    It's like shorting SDS in mid-2009.

  7. you mean contango?but the price goes higher anyway and you earn nothing
  8. I would be careful about the options--- I got the gold direction right by lost in the premium. I know the decay, and yet did the trade for leverage reasons, and "limiting the loss". From time to time I stray from my law that option premium is for selling, even when it is underpriced as long as I get the direction right.
  9. 1. Could you explain the last sentence?

    2. In relation to good/bad, I thought this:

    good=stock up AND oil UP. I do not think that oil lower leads to stocks up. :confused:
  10. DTO went up nicely +4% today right after I posted this.

    My theory is that oil is going to be rigged before the election. They (TPTB) will do whatever it takes to win this election.

    Too many people are expecting QE3. Well guess what, Bernanke got grilled and betcha he'll ask Goldman Sachs to short oil so people won't complain. Once oil settles at $50, then everyone will cry for QE3.

    Did anyone check the recent monetary base graph? What a monster and it's only the beginning!

    It's easier to win in this market if you think like a criminal :D
    #10     Aug 3, 2011