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(03-30-2020, 02:01 PM)vbin Wrote: I sold a few vixy September puts of $12, I think volatility will go down in coming months.
Also booked USO leap calls. @Otter totally agree with you there. I also have leap calls on BKR, XOM, OXY.
I want to sell more SPY but fed printing too much money is scaring me. Basically fed is ready to so anything to save the market.
I think they will be buying SPY by the time earnings start coming. If oil stocks bounce soon I will short them. The leap calls should work out though. Oil won't stay down forever.
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03-30-2020, 07:46 PM
(This post was last modified: 03-30-2020, 07:48 PM by Otter.)
(03-30-2020, 02:01 PM)vbin Wrote: I sold a few vixy September puts of $12, I think volatility will go down in coming months.
Also booked USO leap calls. @Otter totally agree with you there. I also have leap calls on BKR, XOM, OXY.
I want to sell more SPY but fed printing too much money is scaring me. Basically fed is ready to so anything to save the market.
I think we are still in a volatile phase transition, so can't commit to anything on the UVXY/SVXY side other than straight day-trading. If we do have a nice dramatic down leg that drops the premiums on SVXY calls or UVXY puts, I sure wouldn't mind doing that. In the vast majority of market conditions, those are profitable if you didn't pay too much for them (but, they are priced accordingly).
I would like to add more LEAP USO calls and UUP puts while the premiums are reasonable. The two are connected. If the event causing movement in the market is the drop in the value of the dollar due to Fed printing, oil typically increases in price (it is dollar-denominated - if dollars drop in value, oil rises in real value to compensate). Likewise, if the event causing movement in the market is the increase in the value of oil, that likely means the value of the dollar is headed down (based on inflation expectations due to oil price increase forecasting economic growth - this particular scenario is tied closely to the Fed increasing its balance sheet by over 25% of GDP in a week).
I think I will still get my opportunity for a big SPY drop, given the fact that oil has continued into the basement while the market indexes recovered more than 20%. The price of oil (or its collapse due to lack of use) is a pretty handy proxy for economic activity. There's an imbalance at the moment, and I don't think the people who sell the energy inputs that actually make society function are the ones who are wrong at this precise moment.
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Agree on the big SPY drop. When, is the question?. I had mentioned I though the market would get numb to the virus news and perhaps that has started, the human part anyway. There will be no ignoring unemployment and companies talking BK. I really expected a dip sometime this week when it becomes impossible to deny NY has gone parabolic. I think $2T stimulus and a hyper-active FED is the real reason the market is resilient.
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(03-30-2020, 05:44 PM)fenders53 Wrote: (03-30-2020, 02:01 PM)vbin Wrote: I sold a few vixy September puts of $12, I think volatility will go down in coming months.
Also booked USO leap calls. @Otter totally agree with you there. I also have leap calls on BKR, XOM, OXY.
I want to sell more SPY but fed printing too much money is scaring me. Basically fed is ready to so anything to save the market.
I think they will be buying SPY by the time earnings start coming. If oil stocks bounce soon I will short them. The leap calls should work out though. Oil won't stay down forever.
Did you mean fed will be buying? Fed will need congress's approval to directly buy stocks ETFs or stocks.
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@Otter why u are buying USO puts, USO works on futures. Why not oil stocks?
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(03-31-2020, 09:28 AM)vbin Wrote: @Otter why u are buying USO puts, USO works on futures. Why not oil stocks?
USO LEAP calls, not puts.
I don't want to bet on any one company, just the price of WTI. Sure, maybe it drops to $15, but WTI has already been severely hammered and the energy traders are well aware of global demand issues, Russia/Saudi actions, and the fact that tankers and storage are filling up with unsold crude. That's one of the reasons crude didn't participate in the recent market rally. I think there would need to be news of an imminent asteroid strike to drive WTI much lower.
I'm okay playing with the risk of contango at 20-year lows on LEAPs that should spike pretty good the second there is any good news at all. USO has a ton of daily volume as well, and has a robust options market tied to it.
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03-31-2020, 10:13 AM
(This post was last modified: 03-31-2020, 10:13 AM by Otter.)
(03-31-2020, 09:23 AM)vbin Wrote: (03-30-2020, 05:44 PM)fenders53 Wrote: (03-30-2020, 02:01 PM)vbin Wrote: I sold a few vixy September puts of $12, I think volatility will go down in coming months.
Also booked USO leap calls. @Otter totally agree with you there. I also have leap calls on BKR, XOM, OXY.
I want to sell more SPY but fed printing too much money is scaring me. Basically fed is ready to so anything to save the market.
I think they will be buying SPY by the time earnings start coming. If oil stocks bounce soon I will short them. The leap calls should work out though. Oil won't stay down forever.
Did you mean fed will be buying? Fed will need congress's approval to directly buy stocks ETFs or stocks.
Fed has expanded its balance sheet by 25% of GDP in a week, across treasuries, MBSs, munis, and commercial paper. It is also accepting equities as collateral on short term loans to its primary dealers, but is not buying equities directly as it does not have authority to do so.
Fed's stabilization of the credit markets, and acceptance of equities as collateral as part of that process has created some degree of backstop in the equity markets, and the inflationary pressure of 5 trillion+ in additional overall liquidity in the economy is no doubt also a factor driving the recent run in equity prices.
Still think this bear market rally with have another down leg, human nature being what it is.
Long-term, I think what the Fed is doing will have similar results to what they did during and after 2008/2009 until the economy got its footing back. After an initial flight to safety that temporarily increased the value of the dollar relative to other currencies, the dollar dropped in value for several years afterwards, and commodities'/precious metals' dollar-denominated values rose to match as the recovery got underway after the March '09 lows.
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I would also add that, with The U.S. debt to GDP ratio at 105%, devaluing the dollar to repay debt is the only realistic option out there. Default on our sovereign debt is unconstitutional, and would make the recent market drawdowns look like a walk in the park in comparison.
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I am largely ignorant to the inner workings of US dollar valuations. It would seem a dollar should be worth about 70 cents after last weeks festivities. But everybody is juicing so of course it's relative. I am lightly invested in commodity based companies. I'm hesitant to buy gold, because I know it's manipulated and already had a strong run. I'll mess that trade up somehow.
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I am chest deep in oil.and ready to go neck deep. We will see super cycle in oil once demand comes back and high debt companies have filled ch 11( don't get me wrong, I am not happy people leaving jobs but that's what will happen unfortunately. )
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03-31-2020, 03:41 PM
(This post was last modified: 03-31-2020, 03:44 PM by fenders53.)
(03-31-2020, 03:20 PM)vbin Wrote: I am chest deep in oil.and ready to go neck deep. We will see super cycle in oil once demand comes back and high debt companies have filled ch 11( don't get me wrong, I am not happy people leaving jobs but that's what will happen unfortunately. )
Not that you have ever listened to me before on oil but........... Wait for a little more blood in the streets. We are getting close. Nobody is out of business yet, hardly anyone has cut a dividend yet. Capitulation has not happened yet.
What is your thesis that oil demand recovers anytime soon? That has to happen in a big way. You believe the virus is doing VERY real damage right? (your short positions say you believe that and you put your money where your mouth is). That thesis absolutely flies in the face of oil being anything but treacherous for many months. We know demand is dead for a good while. I can only think of one way the supply chain is disrupted and nobody is in the mood to start a regional war right now IMO. The US GOV will do absolutely nothing to raise gas prices in an election/recession year. That would be political suicide. They might fill up the strategic reserve. There is enough oil floating off shore in storage to cover that in a month or less.
I will never invest another nickel in oil until companies are panicking. It has to be starting but I haven't seen it yet.
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(03-31-2020, 03:41 PM)fenders53 Wrote: (03-31-2020, 03:20 PM)vbin Wrote: I am chest deep in oil.and ready to go neck deep. We will see super cycle in oil once demand comes back and high debt companies have filled ch 11( don't get me wrong, I am not happy people leaving jobs but that's what will happen unfortunately. )
Not that you have ever listened to me before on oil but........... Wait for a little more blood in the streets. We are getting close. Nobody is out of business yet, hardly anyone has cut a dividend yet. Capitulation has not happened yet.
What is your thesis that oil demand recovers anytime soon? That has to happen in a big way. You believe the virus is doing VERY real damage right? (your short positions say you believe that and you put your money where your mouth is). That thesis absolutely flies in the face of oil being anything but treacherous for many months. We know demand is dead for a good while. I can only think of one way the supply chain is disrupted and nobody is in the mood to start a regional war right now IMO.
I will never invest another nickel in oil until companies are panicking. It has to be starting but I haven't seen it yet.
I have listened to you before, lol. Otherwise I would be neck deep in oil already. Thank you for reminding me to wait. Agreed, doesn't look like oil is recovering tomoorw. My speculation is that Trump will focus more on oil closer to election time, not at this moment.
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