Fake buying in oil for strategic reserve and bullshit from OPEC subsiding as oil touched $28 and slid all the way to $21 again. real question is whether there are any fundamentals to keep it abobe $20 this time.... I don't see any but still have a time frame of 6 months to a year on all oil investments.
Oil battling that line at $20. there must be some yuuuge players that don't like oil touching $20 so the easiest prediction is oil will bounce again. However airlines cancelled 90% of their April/May flights and no one is really driving so demand obviously in the crapper. Right now is the right time to keep scaling in long term oil plays with the right companies me thinks. 6 months to 1 year out then Bring me your finest hookers and blow! Need a new catchphrase to not steal from Mr. Market.
SO what is the option play here if the wedge formation holds and we are going back to 2600? I believe a calendar spread on SPY using 260 strike to profit off of the deltas, some vega on the back month and time decay if it takes a few days to get down there. With so many weekly expirations hard to choose the right time frames but 2 days ago was the right time to enter when vols were dipping. Now looking a little more pricey so going to pass but putting it up here for us to follow and learn. Maybe 1- 2 week expiration in front month May expiration in back month? Still pricing at $4 - $5 so getting too rich.
THANK YOU GILEAD..timely news plus Trump's presser about Phased opening of the country combination and some short covering before the weekend all combined well. BUUUUT......given that it is Friday I can see the market selling off all of that gap up. But oil is up due to contract roll over and how timely that happens just when oil was sitting at its low at $20... really big gap in front month and next rolling month due to shit demand for the moment and no more storage so production has to be reduced. Will this months contract slide back to $20? time will tell but we needed to get the hell out of that contract already. $20 is a pshychological level for many.
That being said....I still see potential for another leg down to 2600 so keeping some gun powder dry for loading up next entry. even if we start opening up slowly and vaccines are one step closer, we still will see a slower economy and after shocks into the the end of summer which could result in present day next leg down as market always over reaches in its valuations both up and down. 2500-2600 is about 50% retracement of this large move off the sell off so if you beleive in that stuff it could be a target for next sell off. I cannot imagine we simply go back up strsight to 3200-3400 from here today but if we do..ok pretty loaded up now anyway.
next leg lower starting...question is to we retest lows or simple dump to 2400-2600 before we get some legs...
Negative crude prices. They pay you to take delivery of oil. But there is no place left to store it. It came back up to 1-cent per barrel after being negative for a bit. This is gonna sting some. $20 is one thing... 1-cent is catastrophic for domestic producers. If the goal of SA and Russia was to crush the shale producers they are going to succeed. The North is going to go from boom to bust really fast now, days maybe. Don't expect to see a drop in refined products or at the pump. Those prices are based on the aggregate cost of inventory and nobody can buy the cheap oil so we won't get a big break on gas immediately. What a mess.
1 cent is not real though....just reflects that no one is buying and there is no demand and current contract is expiring in one day and has no real value anyway...
Adding SDS to the portfolio as a hedge SDS - ultra short SP500 ETF. Did it via call spreads but hedging against ES making that dip to 2400-2600 territory with all the mess going on now. Looking for SDS at same time to touch 30 if SP500 falls as expected and profit wll offset some of the temporary losses. Using MAY options with 24 days to expiration since shit falls faster than it floats.
UCO - ProShares Ultra Bloomberg Crude Oil Just did a 1:25 reverse split since their price dropped so much. I bought a bunch on a lottery ticket based on whether they can weather this initial stork for a month or two and then recover into early 2021 at the latest. My account has not reflected the split yet but is trading at the higher price so nice fake unrealized gain until they fix it.