Posts: 3,034
Threads: 220
Joined: Jul 2003
...how to play it?
That $100 oil is the big problem. If we get $5 gas it's really going to slam the economy. The thing is, there's an oversupply of oil right now, but hedge funds are driving up the spot price. Hopefuly things will calm down, it won't spread to Saudi Arabia, and we'll get back to fundamentals.
I bought some March QQQQ puts and SLV calls as a hedge yesterday. The puts have doubled already, so I'm glad I did that, but I didn't sell any of my spreads, so I'm definitely getting squeezed.
Still have your silver positions, Breand? On fire right now...
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Posts: 8,501
Threads: 624
Joined: May 2003
You know the interesting thing is the issues that caused oil to go to the $145 p/bb has not been fixed. That is the retirement fund managers buying futures and forcing the price high. The last time this happened it wasn't about supply either. (I know Vllad will argue but I have moved yet). The price increases were more about market manipulation. The only reason the price dropped back to normal, was because of the 2008 bubble burst, and the economy going to the grave.
So hare we are again. Tons of money being dumped into commodities. Retirement funds driving massive dollars into the futures.
The question is how high will it go? Im kicking my self for not buying in at 60 when I wanted. Now that its 90's, Im wondering if it will still drive up to 150, or even the levels they were predicting befor of 180.
Good chart here.
<!-- m --><a class="postlink" href="http://quotes.post1.org/historical-crude-oil-price-chart/">http://quotes.post1.org/historical-crud ... ice-chart/</a><!-- m -->
I think it will hit mid 100's. So where to invest.
- Shale oil concepts will be popular again.
- Anything green will go through the roof again.
- Energy companies like Exon really made the profits last time.
- Who else?
Who will lose?
- Transportation? Trucking etc??
- Airlines
- Travel / resort businesses.
- Retail ie inflation
- Who else?
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
![[Image: maull2.gif]](http://bengtel.com/maull2.gif)
Posts: 3,034
Threads: 220
Joined: Jul 2003
Stocks are tricky, because if the whole market tanks due to high oil, it might take the oil company stocks down too (so many people have index funds these days). So you might as well buy oil (USO) or gas (UGA) itself. Maybe out of the money calls for this summer - I think I might do that now.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Posts: 8,501
Threads: 624
Joined: May 2003
You know the odd thing about USO is it hasnt really been traclking tot he price of oil like I would expect it too.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
Posts: 8,501
Threads: 624
Joined: May 2003
Oil to hit 220????
<!-- m --><a class="postlink" href="http://www.cnbc.com/id/41752844">http://www.cnbc.com/id/41752844</a><!-- m -->
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
Posts: 5,093
Threads: 321
Joined: Dec 2004
Grieve Wrote:Still have your silver positions, Breand? On fire right now...
purchased on Oct. 28th. Up 39.75% since then. Think it's up based on comments by a pretty influential guy saying that between SLV and everyone else, just about all the physical silver in the world is spoken for.
Posts: 8,501
Threads: 624
Joined: May 2003
Listening to some analysis about oil prices and panic mode. The interesting thing is that gas is hitting $4 a gallon now. When it hit $4 a gallon in 2008, there was all sorts of panic. People were rushing to buy Prius and dumping their SUV's. I remember going to the Toyota car dealership and seeing the row of Loaded full size club cab trucks priced normal at 36k seiing for 24k.
So now Gas is $4 but no panic. The analysis says we wont have the same panic until $4.5 or $5. However there is a lot of discussion on impact. For instance when this happen the Economy was good and people were spending money on green. Solar and battery companies were going through the roof. So were alternative oil companies such as shake exploration.
The thing I'm wondering is where to invest now. I'm betting we will see oil into the $120 or above level by mid summer. This means the $4.5 per gallon level will hit. Green and or alternative Oil exploration is going to go bump again.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
Posts: 5,093
Threads: 321
Joined: Dec 2004
I think even with prices where they are, you simply can't go wrong with a long term view on energy stock.
Posts: 3,034
Threads: 220
Joined: Jul 2003
I went back and forth on what to do, and in the end just boughts some Exxon options (which are actually well down since I bought them last week).
A good play might be to buy natural gas stocks like CHK, UPL, or SWN. If oil goes up a lot, natural gas is sure to come back in favor. I think you suggested that yourself a while back, Maul.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Posts: 1,084
Threads: 95
Joined: Dec 2005
I have been making really good money on SLV options since Dec, I took a hit in Jan but put a good in a few hundred extra towards the bottom and am now up about 120%.
I now have 17 options contracts expiring in April for $35 and $38 strike price. If silver dips again I will prob put a grand into AGQ (double leveraged Silver ETF, and of course buy more physical.)
I had some USO options (sold them a few days ago around 40.50). I think something for around july for 45 or so would be a good entry point right now if you wanted to get into USO.
Posts: 3,034
Threads: 220
Joined: Jul 2003
I don't know about $38 by April 15th, but if it does break above that you will certainly be raking in the big bucks! I remember when I first got into call options a few years back, and my GG calls were up 1500% at one point. Very exciting times...until gold crashed and my options nose-dived. 
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Posts: 1,084
Threads: 95
Joined: Dec 2005
yeah for sure options are volatile, and metals are volatile as is.
Getting my options 2-3 months out has worked out well for me, I pay a slightly higher premium but it allows me to weather the storms well.
Posts: 5,093
Threads: 321
Joined: Dec 2004
Anyone read The Big Short? There's that whole read about 2 guys that started with 100k making millions off of doing a LEAP on CapOne.
Posts: 1,084
Threads: 95
Joined: Dec 2005
It looks interesting... A nice synopsis here:
<!-- m --><a class="postlink" href="http://en.wikipedia.org/wiki/The_Big_Short">http://en.wikipedia.org/wiki/The_Big_Short</a><!-- m -->
Posts: 5,093
Threads: 321
Joined: Dec 2004
it's a great book...quick read too. Being made into a movie as well. If I had read Michael Lewis' Liar's Poker in high school, I would have gone into finance instead of engineering. =)
These are the guys:
Cornwall Capital was founded in 2003 by then 30-year olds Charles Ledley and James Mai in a garage in Berkley, CA with $110,000 in capital.[4] Within 2 years they had grown their capital to $15 million by shorting stocks and other investments which they believed were undervalued due to the inability of the market to account for sudden and unexpected change. That is, option prices are set according to past stock performance, and do not take into account unusual or "Black Swan" events that may occur in the future. By finding potential Black Swan events, they were able to make stunning returns in short periods of time.
Posts: 8,501
Threads: 624
Joined: May 2003
shorting undervalued? Dont they mean over valued? Or am I missing something.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
Posts: 5,093
Threads: 321
Joined: Dec 2004
it's saying that long term options are undervalued because no one seems to account for market spikes. So by taking out 2 year options (called LEAPs) in certain stocks you are more likely to hit some major event that causes that stock to spike during that time.
Posts: 9,974
Threads: 777
Joined: Nov 2004
So are you guys talking about BP and Exxon when thinking about purchasing or are you talking about general portfolio's that cover a blanket of smaller companies.
I see Grieve is concerned about a straight Exxon purchase?
Vllad
Posts: 3,034
Threads: 220
Joined: Jul 2003
For me personally, I just want to find one or two stocks or ETFs that I can use as a hedge against oil really taking off (like $150). I'm still bullish on the general market, but if oil gets that high the market will tank for sure.
It's tough because if the market tanks, Big Oil may too (especially thanks to ETFs and index funds), but they should make a ton of money with oil that high.
I think the drillers and explorers will also do well, and maybe nat gas plays. Or you could play it short - airlines and retailers, along with Fedex (sorry!) and UPS would likely suffer badly. Not so sure about things like fertalizers (e.g. POT) - they have oil as an input cost, but can probably pass on the cost more easily.
I'm still not convinced that oil will go too much higher, though, especially if things start to calm down.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Posts: 8,501
Threads: 624
Joined: May 2003
There is a lot of potenial for things taking the next step towards the 150 and beyond mark.
The first would be if Libya strats to destroy its own wells (and blame Al Quida or the US). We all know that this guy is capable and no matter what he say's, willing.
The second would be the same type of activity hitting the Saudi's or Iran. Keep in mind that the ruling parties of both countries are not liked by the majority of the populace.
The third of course is if all this unrest turns into some sort of a Middle East war, ie some asshole starts throwing scuds at Israel, or Israel does something original like bomb one of Iran's Nuke plants.
And then you have the greedy little Exon's and Koch's in the world that likes to shut down refineries in the middle of peak season. This wont impact oil price but it will impact the pump price. My bet is this will happen this year again and we will be shocked and amazed.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
Posts: 3,034
Threads: 220
Joined: Jul 2003
Yeesh, well today EVERYTHING fell - stocks, oil, gold, silver, soft commodities... Have to thank China for that one.
I sold my March QQQQ puts this morning, but I think I may have jumped the gun. At least I'm glad I dumped my SLV calls a couple of days ago.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Posts: 5,093
Threads: 321
Joined: Dec 2004
great buying opportunity! Havent bought anything in awhile because i felt the market was overbought. May grab a couple things now, specifically some POT finally.
Posts: 9,974
Threads: 777
Joined: Nov 2004
I am going to take the chance a purchase a large chunk of oil now.
Vllad
Posts: 8,501
Threads: 624
Joined: May 2003
Vllad Wrote:I am going to take the chance a purchase a large chunk of oil now.
Vllad
Ive actually done very well on Call options for UCO. Libya unrest has been good to me I think we will see $150 by July.
I have been agreeing with Breaden that I think the market has been over sold. Sort of at that top of the channel Ive been tracking, and thinking we will stay in all year. Tomorrow may be another sell off based on GDP modifications and the unemployment numbers.
Could be a good time to buy after that. Of course we might have a massive rally... Who the fuck knows.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
Posts: 3,034
Threads: 220
Joined: Jul 2003
Breand Wrote:great buying opportunity! Havent bought anything in awhile because i felt the market was overbought. May grab a couple things now, specifically some POT finally. I have a bunch of POT call spreads that were doing wonderfully before this week... I think the long term story is intact, though.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
|
