OIL – 20$ – Can it happen, how to short oil

[Anonymous]

The USO ETF doesn’t have long term options, so you can’t go farther than July 08 right now. People often lose money on options because they expire before the expected price move happens.

Another possibility would be OIH, which is an ETF of oil service companies, such as drillers, etc. Options are available to Jan 2010.

I don’t think oil will see $20-30. Even if demand falls, you’re at the whim of OPEC. Heck, you’re at the whim of the Saudis. Then again, predicting energy prices is like predicting where the ball will land on a roulette wheel.

Just go to a casino. At least in a casino, you KNOW you’re gambling. Plus, free drinks!

[stockstradr]

http://piggington.com/market_call_short_the_oil_sector

This topic has been covered, back in Sept ’07. That should tell you how late you are coming up with this short oil play. Most pro’s saw five or six months ago what you are now apparently just figuring about.

You are late enough to this play that oil stocks are already showing a “bounce” up, having already fallen (about 15%) in thirty days (DJ US Oil & Gas Index, DJ US Oil & Gas Producers Index). Oil is climbing back up off the recent lows. Guys like me have already made plenty of money on this bet, so our risk is much lower.

This doesn’t have to mean you cannot still make money shorting oil, just that your risk is higher as you come late to squeeze a few dimes out of last part of a trend.

Ask youself: “Do I think the coming recession will be WORSE than what is priced into oil sector stocks already? Can I accept the significant RISK of shorting oil?”

I think most pro’s would conclude you are an amateur (no insult intended) if you believe oil will hit $20/bbl. So they would advise an amateur not to play in this oil commodity game which is dominated by pro’s.

Yet I have an instinct we will see oil sink below $60 / bbl within 24 months because this recession will be MUCH worse than has so far been priced into oil sector stocks. I plan to continue holding my short oil positions, but this IS risky.

IMPORTANTLY, understand that shorting oil is one of the riskiest bets you can make because of multiple unpredictable risk factors: war in iraq; terrorists damaging oil delivery systems or production facilities; bad weather destroy production facilities; China oil demand rises instead of falling (no recession for Asia);OPEC doesn’t drop demand, which they are already threatening. Don’t short with more than 10% of your portfolio.

ProShares “DUG” has been an efficient way for me to short the oil sect. However, shorting oil directly may be the best choice at this point, because oil is only $8 below its $100/bbl high, so has fallen a lot less than the oil sector stocks.

[stockstradr]

http://piggington.com/market_call_short_the_oil_sector

This topic has been covered, back in Sept ’07. That should tell you how late you are coming up with this short oil play. Most pro’s saw five or six months ago what you are now apparently just figuring about.

You are late enough to this play that oil stocks are already showing a “bounce” up, having already fallen (about 15%) in thirty days (DJ US Oil & Gas Index, DJ US Oil & Gas Producers Index). Oil is climbing back up off the recent lows. Guys like me have already made plenty of money on this bet, so our risk is much lower.

This doesn’t have to mean you cannot still make money shorting oil, just that your risk is higher as you come late to squeeze a few dimes out of last part of a trend.

Ask youself: “Do I think the coming recession will be WORSE than what is priced into oil sector stocks already? Can I accept the significant RISK of shorting oil?”

I think most pro’s would conclude you are an amateur (no insult intended) if you believe oil will hit $20/bbl. So they would advise an amateur not to play in this oil commodity game which is dominated by pro’s.

Yet I have an instinct we will see oil sink below $60 / bbl within 24 months because this recession will be MUCH worse than has so far been priced into oil sector stocks. I plan to continue holding my short oil positions, but this IS risky.

IMPORTANTLY, understand that shorting oil is one of the riskiest bets you can make because of multiple unpredictable risk factors: war in iraq; terrorists damaging oil delivery systems or production facilities; bad weather destroy production facilities; China oil demand rises instead of falling (no recession for Asia);OPEC doesn’t drop demand, which they are already threatening. Don’t short with more than 10% of your portfolio.

ProShares “DUG” has been an efficient way for me to short the oil sect. However, shorting oil directly may be the best choice at this point, because oil is only $8 below its $100/bbl high, so has fallen a lot less than the oil sector stocks.

[stockstradr]

http://piggington.com/market_call_short_the_oil_sector

This topic has been covered, back in Sept ’07. That should tell you how late you are coming up with this short oil play. Most pro’s saw five or six months ago what you are now apparently just figuring about.

You are late enough to this play that oil stocks are already showing a “bounce” up, having already fallen (about 15%) in thirty days (DJ US Oil & Gas Index, DJ US Oil & Gas Producers Index). Oil is climbing back up off the recent lows. Guys like me have already made plenty of money on this bet, so our risk is much lower.

This doesn’t have to mean you cannot still make money shorting oil, just that your risk is higher as you come late to squeeze a few dimes out of last part of a trend.

Ask youself: “Do I think the coming recession will be WORSE than what is priced into oil sector stocks already? Can I accept the significant RISK of shorting oil?”

I think most pro’s would conclude you are an amateur (no insult intended) if you believe oil will hit $20/bbl. So they would advise an amateur not to play in this oil commodity game which is dominated by pro’s.

Yet I have an instinct we will see oil sink below $60 / bbl within 24 months because this recession will be MUCH worse than has so far been priced into oil sector stocks. I plan to continue holding my short oil positions, but this IS risky.

IMPORTANTLY, understand that shorting oil is one of the riskiest bets you can make because of multiple unpredictable risk factors: war in iraq; terrorists damaging oil delivery systems or production facilities; bad weather destroy production facilities; China oil demand rises instead of falling (no recession for Asia);OPEC doesn’t drop demand, which they are already threatening. Don’t short with more than 10% of your portfolio.

ProShares “DUG” has been an efficient way for me to short the oil sect. However, shorting oil directly may be the best choice at this point, because oil is only $8 below its $100/bbl high, so has fallen a lot less than the oil sector stocks.

[stockstradr]

http://piggington.com/market_call_short_the_oil_sector

This topic has been covered, back in Sept ’07. That should tell you how late you are coming up with this short oil play. Most pro’s saw five or six months ago what you are now apparently just figuring about.

You are late enough to this play that oil stocks are already showing a “bounce” up, having already fallen (about 15%) in thirty days (DJ US Oil & Gas Index, DJ US Oil & Gas Producers Index). Oil is climbing back up off the recent lows. Guys like me have already made plenty of money on this bet, so our risk is much lower.

This doesn’t have to mean you cannot still make money shorting oil, just that your risk is higher as you come late to squeeze a few dimes out of last part of a trend.

Ask youself: “Do I think the coming recession will be WORSE than what is priced into oil sector stocks already? Can I accept the significant RISK of shorting oil?”

I think most pro’s would conclude you are an amateur (no insult intended) if you believe oil will hit $20/bbl. So they would advise an amateur not to play in this oil commodity game which is dominated by pro’s.

Yet I have an instinct we will see oil sink below $60 / bbl within 24 months because this recession will be MUCH worse than has so far been priced into oil sector stocks. I plan to continue holding my short oil positions, but this IS risky.

IMPORTANTLY, understand that shorting oil is one of the riskiest bets you can make because of multiple unpredictable risk factors: war in iraq; terrorists damaging oil delivery systems or production facilities; bad weather destroy production facilities; China oil demand rises instead of falling (no recession for Asia);OPEC doesn’t drop demand, which they are already threatening. Don’t short with more than 10% of your portfolio.

ProShares “DUG” has been an efficient way for me to short the oil sect. However, shorting oil directly may be the best choice at this point, because oil is only $8 below its $100/bbl high, so has fallen a lot less than the oil sector stocks.

[stockstradr]

http://piggington.com/market_call_short_the_oil_sector

This topic has been covered, back in Sept ’07. That should tell you how late you are coming up with this short oil play. Most pro’s saw five or six months ago what you are now apparently just figuring about.

You are late enough to this play that oil stocks are already showing a “bounce” up, having already fallen (about 15%) in thirty days (DJ US Oil & Gas Index, DJ US Oil & Gas Producers Index). Oil is climbing back up off the recent lows. Guys like me have already made plenty of money on this bet, so our risk is much lower.

This doesn’t have to mean you cannot still make money shorting oil, just that your risk is higher as you come late to squeeze a few dimes out of last part of a trend.

Ask youself: “Do I think the coming recession will be WORSE than what is priced into oil sector stocks already? Can I accept the significant RISK of shorting oil?”

I think most pro’s would conclude you are an amateur (no insult intended) if you believe oil will hit $20/bbl. So they would advise an amateur not to play in this oil commodity game which is dominated by pro’s.

Yet I have an instinct we will see oil sink below $60 / bbl within 24 months because this recession will be MUCH worse than has so far been priced into oil sector stocks. I plan to continue holding my short oil positions, but this IS risky.

IMPORTANTLY, understand that shorting oil is one of the riskiest bets you can make because of multiple unpredictable risk factors: war in iraq; terrorists damaging oil delivery systems or production facilities; bad weather destroy production facilities; China oil demand rises instead of falling (no recession for Asia);OPEC doesn’t drop demand, which they are already threatening. Don’t short with more than 10% of your portfolio.

ProShares “DUG” has been an efficient way for me to short the oil sect. However, shorting oil directly may be the best choice at this point, because oil is only $8 below its $100/bbl high, so has fallen a lot less than the oil sector stocks.

[Anonymous]

stockstradr,
While you are correct that the oil service stocks have taken a nasty tumble since Oct 07, I would rather attribute this short success to the overall market bloodbath rather than special insights from the “pros”. Afterall, there are also a lot of people patting themselves on the back for their shorts on Google, banks, gold miners, and just about anything else.

As you pointed out, crude itself can still be a good short trade as it is now only $8 off its $100 high (which is what the original question was all about). Incidentally, USO is also currently about 8% off its high.

I also suspect that when the stock mkt recovers, the oil service stocks will rise even if crude itself takes a dip. So, I’m really not sure how much of a correlation oil service stocks will have with crude oil.

My personal opinion: oil will be volatile for a long long time. If ever crude falls to $70, I’m buying USO with both hands.

[Anonymous]

stockstradr,
While you are correct that the oil service stocks have taken a nasty tumble since Oct 07, I would rather attribute this short success to the overall market bloodbath rather than special insights from the “pros”. Afterall, there are also a lot of people patting themselves on the back for their shorts on Google, banks, gold miners, and just about anything else.

As you pointed out, crude itself can still be a good short trade as it is now only $8 off its $100 high (which is what the original question was all about). Incidentally, USO is also currently about 8% off its high.

I also suspect that when the stock mkt recovers, the oil service stocks will rise even if crude itself takes a dip. So, I’m really not sure how much of a correlation oil service stocks will have with crude oil.

My personal opinion: oil will be volatile for a long long time. If ever crude falls to $70, I’m buying USO with both hands.

[Anonymous]

stockstradr,
While you are correct that the oil service stocks have taken a nasty tumble since Oct 07, I would rather attribute this short success to the overall market bloodbath rather than special insights from the “pros”. Afterall, there are also a lot of people patting themselves on the back for their shorts on Google, banks, gold miners, and just about anything else.

As you pointed out, crude itself can still be a good short trade as it is now only $8 off its $100 high (which is what the original question was all about). Incidentally, USO is also currently about 8% off its high.

I also suspect that when the stock mkt recovers, the oil service stocks will rise even if crude itself takes a dip. So, I’m really not sure how much of a correlation oil service stocks will have with crude oil.

My personal opinion: oil will be volatile for a long long time. If ever crude falls to $70, I’m buying USO with both hands.

[Anonymous]

stockstradr,
While you are correct that the oil service stocks have taken a nasty tumble since Oct 07, I would rather attribute this short success to the overall market bloodbath rather than special insights from the “pros”. Afterall, there are also a lot of people patting themselves on the back for their shorts on Google, banks, gold miners, and just about anything else.

As you pointed out, crude itself can still be a good short trade as it is now only $8 off its $100 high (which is what the original question was all about). Incidentally, USO is also currently about 8% off its high.

I also suspect that when the stock mkt recovers, the oil service stocks will rise even if crude itself takes a dip. So, I’m really not sure how much of a correlation oil service stocks will have with crude oil.

My personal opinion: oil will be volatile for a long long time. If ever crude falls to $70, I’m buying USO with both hands.

[Anonymous]

stockstradr,
While you are correct that the oil service stocks have taken a nasty tumble since Oct 07, I would rather attribute this short success to the overall market bloodbath rather than special insights from the “pros”. Afterall, there are also a lot of people patting themselves on the back for their shorts on Google, banks, gold miners, and just about anything else.

As you pointed out, crude itself can still be a good short trade as it is now only $8 off its $100 high (which is what the original question was all about). Incidentally, USO is also currently about 8% off its high.

I also suspect that when the stock mkt recovers, the oil service stocks will rise even if crude itself takes a dip. So, I’m really not sure how much of a correlation oil service stocks will have with crude oil.

My personal opinion: oil will be volatile for a long long time. If ever crude falls to $70, I’m buying USO with both hands.

[stockstradr]

>>I would rather attribute this short success to the overall market bloodbath

Well, it seems you’re mostly correct on that, as the DJ Oil & Gas Index correlates fairly well to the S&P500 over last three months, except it appears the oil and gas sector index was hit harder falling about 5% more (fell further) than the S&P500.

[Personally, it doesn’t matter to me if the overall market correction was the driver because in Oct ’07 I had A LOT more of my portfolio bet on a downside correction in overall stock indexes than I had in short oil sector positions]

Yes, I also plan to start buying oil LONG at $70/bbl, and accelerate my buying as it nears $60. I absolutely view this recession as bringing the LAST opportunity to buy oil at reasonable prices during the first phase of onset of Peak Oil dynamics

Now the one problem with my little prediction of $60 oil might be say 20% (real inflation, not fake gov. stat’s CPI) inflation on the dollar over the next 24 months and oil prices are set in dollars. Maybe I should qualify my prediction by saying I expect oil will hit $60 in inflation-adjusted dollars during the next 24 months.

One other comment, if there is ANY question if the “pro’s” and non-pro’s have been shorting oil based on predicted recession (demand for oil drops) then just TURN ON YOUR TV or read your newspaper! The short oil pundits have been out in full force in the media now for over a month, although I admit my claim is a little thin that they have been shorting oil since Oct ’07.

[stockstradr]

>>I would rather attribute this short success to the overall market bloodbath

Well, it seems you’re mostly correct on that, as the DJ Oil & Gas Index correlates fairly well to the S&P500 over last three months, except it appears the oil and gas sector index was hit harder falling about 5% more (fell further) than the S&P500.

[Personally, it doesn’t matter to me if the overall market correction was the driver because in Oct ’07 I had A LOT more of my portfolio bet on a downside correction in overall stock indexes than I had in short oil sector positions]

Yes, I also plan to start buying oil LONG at $70/bbl, and accelerate my buying as it nears $60. I absolutely view this recession as bringing the LAST opportunity to buy oil at reasonable prices during the first phase of onset of Peak Oil dynamics

Now the one problem with my little prediction of $60 oil might be say 20% (real inflation, not fake gov. stat’s CPI) inflation on the dollar over the next 24 months and oil prices are set in dollars. Maybe I should qualify my prediction by saying I expect oil will hit $60 in inflation-adjusted dollars during the next 24 months.

One other comment, if there is ANY question if the “pro’s” and non-pro’s have been shorting oil based on predicted recession (demand for oil drops) then just TURN ON YOUR TV or read your newspaper! The short oil pundits have been out in full force in the media now for over a month, although I admit my claim is a little thin that they have been shorting oil since Oct ’07.

[stockstradr]

>>I would rather attribute this short success to the overall market bloodbath

Well, it seems you’re mostly correct on that, as the DJ Oil & Gas Index correlates fairly well to the S&P500 over last three months, except it appears the oil and gas sector index was hit harder falling about 5% more (fell further) than the S&P500.

[Personally, it doesn’t matter to me if the overall market correction was the driver because in Oct ’07 I had A LOT more of my portfolio bet on a downside correction in overall stock indexes than I had in short oil sector positions]

Yes, I also plan to start buying oil LONG at $70/bbl, and accelerate my buying as it nears $60. I absolutely view this recession as bringing the LAST opportunity to buy oil at reasonable prices during the first phase of onset of Peak Oil dynamics

Now the one problem with my little prediction of $60 oil might be say 20% (real inflation, not fake gov. stat’s CPI) inflation on the dollar over the next 24 months and oil prices are set in dollars. Maybe I should qualify my prediction by saying I expect oil will hit $60 in inflation-adjusted dollars during the next 24 months.

One other comment, if there is ANY question if the “pro’s” and non-pro’s have been shorting oil based on predicted recession (demand for oil drops) then just TURN ON YOUR TV or read your newspaper! The short oil pundits have been out in full force in the media now for over a month, although I admit my claim is a little thin that they have been shorting oil since Oct ’07.

[stockstradr]

>>I would rather attribute this short success to the overall market bloodbath

Well, it seems you’re mostly correct on that, as the DJ Oil & Gas Index correlates fairly well to the S&P500 over last three months, except it appears the oil and gas sector index was hit harder falling about 5% more (fell further) than the S&P500.

[Personally, it doesn’t matter to me if the overall market correction was the driver because in Oct ’07 I had A LOT more of my portfolio bet on a downside correction in overall stock indexes than I had in short oil sector positions]

Yes, I also plan to start buying oil LONG at $70/bbl, and accelerate my buying as it nears $60. I absolutely view this recession as bringing the LAST opportunity to buy oil at reasonable prices during the first phase of onset of Peak Oil dynamics

Now the one problem with my little prediction of $60 oil might be say 20% (real inflation, not fake gov. stat’s CPI) inflation on the dollar over the next 24 months and oil prices are set in dollars. Maybe I should qualify my prediction by saying I expect oil will hit $60 in inflation-adjusted dollars during the next 24 months.

One other comment, if there is ANY question if the “pro’s” and non-pro’s have been shorting oil based on predicted recession (demand for oil drops) then just TURN ON YOUR TV or read your newspaper! The short oil pundits have been out in full force in the media now for over a month, although I admit my claim is a little thin that they have been shorting oil since Oct ’07.

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