I am looking into buying oil future options, which will require me to upgrade my brokerage account type.
I thought I could just get options on the USO etf, but they seem too expensive. USO is also high fees and I don’t trust it based on prior problems it had.
Calls on oil companies that are short dated and only a bit out of the money seem like a good deal still. If WTI, now at 120, hits 150+ in late summer, wouldn’t exxon go up from 99 now to 120-130? Yet September calls at 105 and 115 are still cheap. I think even if oil stays at 120 and gas at 8.50, XOM is worth 140.
Even cheaper are calls on TTE, the biggest french oil company. There’s a risk in Europe of windfall profits taxes. However, I don’t think it is particularly high.
If you adjust for inflation, oil peaked at $143 in 1979 and 167 in 2008. JP Morgan in late 2021 predicted $125 oil this year and 150 in 2023.
Real per capita GDP has doubled in the USA since 1979 and much more than doubled in China. I believe that unlike in the 1970s, the demand impact of 150-200 oil would be quite small.
