The Speculative Stocks....

[fenders53]

(04-15-2020, 11:03 AM)Otter Wrote:

(04-15-2020, 10:24 AM)fenders53 Wrote:

(04-15-2020, 10:11 AM)Otter Wrote:

(04-15-2020, 09:54 AM)fenders53 Wrote: Closed my USO puts for a 29.6% gain in about two weeks.  Kept a single put open so I will be forced to track it.  It didn't move like I thought it would vs USO but I got the general direction right.  I have much to learn.

Nice play.

The premiums/implied volatility on put options are so high that, absent consistently big circuit-breaker moves like the market had several weeks back, it is hard to get the 100+% moves that were easy when the VIX was half what it is now. I've been playing around with ideas on various options profits calculators, and the size of the moves needed for breakevens at expiry is staggering for most of the stuff I've looked at. 

Put in for futures trading approval with one of my brokerages, as I eventually intend to go long crude directly (rather than through USO).

You are patient and the time for that will be right soon.  There were moments when I had called the direction of USO correct by 10% and my puts were profitable only 2%.  Nothing like I have ever experienced.  WTI could very well drop below $20, but I am just not convinced being short oil at $20 meets my risk reward standards.  I'll get long when I see some real pain from oil companies.  I don't see too many fracker BKs or any div cuts from majors yet. Maybe it doesn't happen but I think it will.

I think CHK is toast, but they have somehow managed to hold on as a zombie company for much of the past decade. That 200/1 reverse split has to be some sort of a record. 

XOM has issued about $20 billion in new debt in the past couple weeks. That would cover roughly a year of dividend payments at the current level, but I suspect they use quite a bit of it to buy distressed assets. 

I think an uptrend in crude itself will occur before a lot of the bankruptcies and dividend cuts are actually announced, but am curious to see what pricing looks like when storage limits are reached and demand is still essentially nonexistent.

It seems crazy what oil majors will do to preserve aristocrat status.  They know the SP will be cut in half if they don't.  I don't know how crude prices can rise but it will find a way at some point.  An uptrend in crude will happen just as an uptrend in the S&P always happens well before the storm is actually over.  Maybe it already happened for the SPY but this is obviously extreme by any measure.