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You may be missing the forest for the trees. The oil market has fundamentally shifted in the last decade. The US is energy independent with its massive oil proj

by anonu 7y ago

You may be missing the forest for the trees. The oil market has fundamentally shifted in the last decade. The US is energy independent with its massive oil projects and unfettered access to fracking and tar sands and what not. Don't catch a falling knife. Case in point: Look at natural gas. We've been in a gas glut for a decade plus+ (https://pages.etflogic.io/?ticker=UNG https://pages.etflogic.io/?ticker=UNG for example, https://finviz.com/futures_charts.ashx?t=NG&p=m1 https://finviz.com/futures_charts.ashx?t=NG&p=m1 ). Big infrastructure builds and special cryo tanks are everywhere. Gas has never recovered from its 2008 peak... The same has played out and is playing out in crude.

throw51319 7y ago
But if oil war ends in next 18 months, and demand goes back to where it was (which it will in 18 months)... why would things not go back to how they were 2 months ago?
- blaser-waffle 7y ago
  1) will the oil war end in 18 months? (probably, but who knows how things will play out) 2) will demand for oil pick up? there are a lot of business hurting bad now, and lots more shuttering. the work-remote thing is out of the bag, and remote work for office types may just be a thing for here on out.
rwmurrayVT 7y ago
You're right. The market has shifted in the last decade. That's why USO dropped from 60-100 before 2008, stayed around 40 until 2015, and then maintained 10-13 ever since. There's no way it won't rebound slightly when this ends. If you're risk adverse the $2 calls Jan 21st, 2022 are $3.35. Required move to break even is 9.91%. It dropped 50% MTD. I don't need a full recovery, just a minimum of 10% over the next 2 years.
- anonu 7y ago
  > just a minimum of 10% over the next 2 years. Misleading... Sure breakeven is 10% if you assume all-else-equal. Your path to profitability is path dependent. If it moved 10% tomorrow, you would probably be hard-pressed to make any money considering spreads and other trading costs. You really need a bigger move to breakeven in a short amount of time.
  - FlopV 7y ago
    Correct me if I'm wrong but believe he's talking about 2 years out to acctaully purchase the stock ?
  - rwmurrayVT 7y ago
    That's not correct, nor misleading. The breakeven point would need to be met on the day of expiration. If it shot up 10% tomorrow I would be profitable. I'd still have the value associated with theta less volatility.

by anonu 7y ago

throw51319 7y ago

But if oil war ends in next 18 months, and demand goes back to where it was (which it will in 18 months)... why would things not go back to how they were 2 months ago?

blaser-waffle 7y ago
1) will the oil war end in 18 months? (probably, but who knows how things will play out) 2) will demand for oil pick up? there are a lot of business hurting bad now, and lots more shuttering. the work-remote thing is out of the bag, and remote work for office types may just be a thing for here on out.

rwmurrayVT 7y ago

You're right. The market has shifted in the last decade. That's why USO dropped from 60-100 before 2008, stayed around 40 until 2015, and then maintained 10-13 ever since. There's no way it won't rebound slightly when this ends. If you're risk adverse the $2 calls Jan 21st, 2022 are $3.35. Required move to break even is 9.91%. It dropped 50% MTD. I don't need a full recovery, just a minimum of 10% over the next 2 years.

anonu 7y ago
> just a minimum of 10% over the next 2 years. Misleading... Sure breakeven is 10% if you assume all-else-equal. Your path to profitability is path dependent. If it moved 10% tomorrow, you would probably be hard-pressed to make any money considering spreads and other trading costs. You really need a bigger move to breakeven in a short amount of time.
- FlopV 7y ago
  Correct me if I'm wrong but believe he's talking about 2 years out to acctaully purchase the stock ?
- rwmurrayVT 7y ago
  That's not correct, nor misleading. The breakeven point would need to be met on the day of expiration. If it shot up 10% tomorrow I would be profitable. I'd still have the value associated with theta less volatility.