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+--- Thread: The Speculative Stocks.... (/showthread.php?tid=1897)
RE: The Speculative Stocks.... - fenders53 - 04-01-2020
(04-01-2020, 09:44 AM)Otter Wrote:I will read up. I may be the king of oil stock bears right now but obviously this oil price level works for nobody more than a few months. A quick read of your link states this is a play on short-term oil price moves, but you are buying LEAPs. Can you explain the thesis?(04-01-2020, 09:40 AM)fenders53 Wrote:(04-01-2020, 09:22 AM)Otter Wrote: Added more 1/21/22 USO 5 LEAPs this morning. USO up 0.25% while the market is down nearly 3%Can you share a paragraph about USO please. I don't know what that is but trust your instincts. I have some cash.
https://www.etf.com/USO
It is designed to track the price of West Texas Intermediate crude.
Contango is a risk, but with the price of crude where it is, I am willing to take that risk. LEAPs are cheap at the moment, so why the heck not give myself a little extra runway.
RE: The Speculative Stocks.... - Otter - 04-01-2020
(04-01-2020, 09:50 AM)fenders53 Wrote:(04-01-2020, 09:44 AM)Otter Wrote:I will read up. I may be the king of oil stock bears right now but obviously this oil price level works for nobody more than a few months. A quick read of your link states this is a play on short-term oil price moves, but you are buying LEAPs. Can you explain the thesis?(04-01-2020, 09:40 AM)fenders53 Wrote:(04-01-2020, 09:22 AM)Otter Wrote: Added more 1/21/22 USO 5 LEAPs this morning. USO up 0.25% while the market is down nearly 3%Can you share a paragraph about USO please. I don't know what that is but trust your instincts. I have some cash.
https://www.etf.com/USO
It is designed to track the price of West Texas Intermediate crude.
Contango is a risk, but with the price of crude where it is, I am willing to take that risk. LEAPs are cheap at the moment, so why the heck not give myself a little extra runway.
The fund buys near-term futures contracts to track the current price of WTI as closely as possible. Roll costs can be substantial when there are large fluctuations in the underlying price of WTI (difference between current spot and the cost of purchasing that next near-month future to keep the fund going). That is the main risk. If WTI is getting super-volatile around the time they are rolling their contracts, it can significantly impact fund performance.
I can envision a near-term scenario where WTI drops to $15, and likewise where it spikes to the high $20s temporarily. I can also envision a scenario where crude slowly/steadily climbs back into the $50s within 2 years (in which case USO should track along fairly steadily). The LEAPs give me optionality without the risk of getting absolutely burned on something with short-term expiry if oil goes down to $15. They should also spike nicely if crude spikes (not to the same extent as weeklies, but good enough for me).
RE: The Speculative Stocks.... - fenders53 - 04-01-2020
We agree on the ST future. Saudi has oil on ships with no buyer. They will stop that game soon enough but for now oil will have to digest the foolishness. WTI $15 is my target. The first fracker to my knowledge filed CH13 yesterday. Like always, the low oil prices will be solved by low oil prices.
The Speculative Stocks.... - vbin - 04-01-2020
@fenders53 bankruptcies have started. Whitening patrolium filled it.
RE: The Speculative Stocks.... - fenders53 - 04-01-2020
(04-01-2020, 02:38 PM)vbin Wrote: @fenders53 bankruptcies have started. Whitening patrolium filled it.
I saw that. The BKs have to grow for the sector to get well, and I expect they will. It shouldn't take long with prices so low that no US company can come anywhere close to a profit. The oil company announcements with be frequent.
RE: The Speculative Stocks.... - Otter - 04-02-2020
Closed out my EEM 12/18/20 41 Puts purchased on March 4 for a 194% gain. Rolled the proceeds into UUP 01/21/22 27 Puts.
RE: The Speculative Stocks.... - Otter - 04-02-2020
USO 5 calls are now in the money. This market is ridiculous.
Total buy the rumor, sell the news situation. Dumping those calls as soon as news of any Saudi/Russia deal or non-deal is announced.
RE: The Speculative Stocks.... - fenders53 - 04-02-2020
(04-01-2020, 02:38 PM)vbin Wrote: @fenders53 bankruptcies have started. Whitening patrolium filled it.
If the SA article was correct they also paid out HUGE bonus money to upper management literally a week ago prior to filing CH11. I'm just going to hope that is illegal and made right. And we cry the government wants to make rules. smh
RE: The Speculative Stocks.... - Otter - 04-02-2020
(04-02-2020, 09:53 AM)fenders53 Wrote:(04-01-2020, 02:38 PM)vbin Wrote: @fenders53 bankruptcies have started. Whitening patrolium filled it.
If the SA article was correct they also paid out HUGE bonus money to upper management literally a week ago prior to filing CH11 and it's made right. I'm just going to hope that is illegal. And we cry the government wants to make rules. smh
That can be clawed back by the trustee in bankruptcy. It is, in all likelihood, a fraudulent transfer that occurred while the company was technically insolvent:
https://www.law.cornell.edu/uscode/text/11/548
RE: The Speculative Stocks.... - vbin - 04-02-2020
(04-02-2020, 09:56 AM)Otter Wrote:It all looks pre-arranged to me. Share holders value will be lost while creditors and management will get something. The company continues after ch 11.(04-02-2020, 09:53 AM)fenders53 Wrote:(04-01-2020, 02:38 PM)vbin Wrote: @fenders53 bankruptcies have started. Whitening patrolium filled it.
If the SA article was correct they also paid out HUGE bonus money to upper management literally a week ago prior to filing CH11 and it's made right. I'm just going to hope that is illegal. And we cry the government wants to make rules. smh
That can be clawed back by the trustee in bankruptcy. It is, in all likelihood, a fraudulent transfer that occurred while the company was technically insolvent:
https://www.law.cornell.edu/uscode/text/11/548
I think the real negetive news in oil has to be when companies start plugging the wells. That hasn't come out yet.
RE: The Speculative Stocks.... - Otter - 04-02-2020
(04-02-2020, 09:59 AM)vbin Wrote:(04-02-2020, 09:56 AM)Otter Wrote:It all looks pre-arranged to me. Share holders value will be lost while creditors and management will get something. The company continues after ch 11.(04-02-2020, 09:53 AM)fenders53 Wrote:(04-01-2020, 02:38 PM)vbin Wrote: @fenders53 bankruptcies have started. Whitening patrolium filled it.
If the SA article was correct they also paid out HUGE bonus money to upper management literally a week ago prior to filing CH11 and it's made right. I'm just going to hope that is illegal. And we cry the government wants to make rules. smh
That can be clawed back by the trustee in bankruptcy. It is, in all likelihood, a fraudulent transfer that occurred while the company was technically insolvent:
https://www.law.cornell.edu/uscode/text/11/548
I think the real negetive news in oil has to be when companies start plugging the wells. That hasn't come out yet.
The shareholders are the lowest priority in bankruptcy proceedings, behind even unsecured creditors. The trustee will claw back those bonuses and use the funds to pay down company debts. Shareholders being wiped out is a given.
RE: The Speculative Stocks.... - fenders53 - 04-02-2020
(04-02-2020, 09:56 AM)Otter Wrote:(04-02-2020, 09:53 AM)fenders53 Wrote:(04-01-2020, 02:38 PM)vbin Wrote: @fenders53 bankruptcies have started. Whitening patrolium filled it.
If the SA article was correct they also paid out HUGE bonus money to upper management literally a week ago prior to filing CH11 and it's made right. I'm just going to hope that is illegal. And we cry the government wants to make rules. smh
That can be clawed back by the trustee in bankruptcy. It is, in all likelihood, a fraudulent transfer that occurred while the company was technically insolvent:
https://www.law.cornell.edu/uscode/text/11/548
Good! I know the business world isn't Disney story morals. I don't remember the exact numbers but it was clearly enough money to keep them in business a good while longer. It wasn't just a couple million bucks, and it was literally like 7-8 days ago they blessed themselves with the remaining cash.