Mixed News: Closed AGN Puts and watching calls droop
THE GOOD NEWS
* Got $4.1o for the AGN puts.
* ETFC looks really good. The recent ETFC move I made could net 41% by October. The Older ETFC shares that I wrote the $4 calls could show 11%.
* DUG is up big again. Up 30% since we bought last month. It's ~10% of the portfolio, so that's nice to see
* TRID is holding up nicely, but we'll see if it can hold onto the gains and advance more
THE BAD
Meanwhile, the rally is hurting us in two ways.
Short positions - Ultrashorts and puts are getting smacked around. Earnings season will do that. I'm not worried about the puts - with 6 months to go, time is on our side.
Call positions - The oil dip is crushing the energy markets. Oil has gone slightly bearish and exposed a lot of traders. The future price of oil is contingent on actual supply/demand constraints. Those constraints are now showing the potential for oversupply based on a potential dip in global demand.
A lot of ifs - if the US demand slows, if Asia demand slows. I note that Russian car sales are up 44% and China car sales are up 15%. US demand is slowing. Meanwhile, no storms have hit the Gulf of Mexico yet. Add it up and there are a lot of unknowns - which makes for a lot of volatility focused around the weekly supply figures from the EIA.
Further adding volatility is the role of hedge funds and banks. It's one thing for investment companies to profit off the run-up: prices will come down as they lock in profits and sell, but prices will move back up as investors rotate back in in the face of superior profits. To that point, notice the recent CLF acquisition of ANR - a sign of lots of cash.
But what if the oil run is over? What if investors didn't benefit from the run as much as drive it? If so, then this is over.
I think we're about to see major profits from these companies, and for the next few quarters as well. I think we'll see consolidations as well. Meanwhile, I've done the due diligence on global demand and I'm satisfied that energy demand will only rise. Most of our options give us 6 months time - that's almost 3 quarters of earnings.
We may be experiencing what we saw in March - I bought puts right before a rally. We had to wait a few months, but the payoff has been good so far.
* Got $4.1o for the AGN puts.
* ETFC looks really good. The recent ETFC move I made could net 41% by October. The Older ETFC shares that I wrote the $4 calls could show 11%.
* DUG is up big again. Up 30% since we bought last month. It's ~10% of the portfolio, so that's nice to see
* TRID is holding up nicely, but we'll see if it can hold onto the gains and advance more
THE BAD
Meanwhile, the rally is hurting us in two ways.
Short positions - Ultrashorts and puts are getting smacked around. Earnings season will do that. I'm not worried about the puts - with 6 months to go, time is on our side.
Call positions - The oil dip is crushing the energy markets. Oil has gone slightly bearish and exposed a lot of traders. The future price of oil is contingent on actual supply/demand constraints. Those constraints are now showing the potential for oversupply based on a potential dip in global demand.
A lot of ifs - if the US demand slows, if Asia demand slows. I note that Russian car sales are up 44% and China car sales are up 15%. US demand is slowing. Meanwhile, no storms have hit the Gulf of Mexico yet. Add it up and there are a lot of unknowns - which makes for a lot of volatility focused around the weekly supply figures from the EIA.
Further adding volatility is the role of hedge funds and banks. It's one thing for investment companies to profit off the run-up: prices will come down as they lock in profits and sell, but prices will move back up as investors rotate back in in the face of superior profits. To that point, notice the recent CLF acquisition of ANR - a sign of lots of cash.
But what if the oil run is over? What if investors didn't benefit from the run as much as drive it? If so, then this is over.
I think we're about to see major profits from these companies, and for the next few quarters as well. I think we'll see consolidations as well. Meanwhile, I've done the due diligence on global demand and I'm satisfied that energy demand will only rise. Most of our options give us 6 months time - that's almost 3 quarters of earnings.
We may be experiencing what we saw in March - I bought puts right before a rally. We had to wait a few months, but the payoff has been good so far.
posted by Andrew at
10:14 AM
1 Comments:
We are in a recession... 6 months out, are the ultrashorts going to be up for us? Logic says yes, but this isnt a logical beast.
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