The Stock Market Thread

somehow i'm still paying $2.50 a gallon

 

Tough, but fair.

 

So how does one buy oil futures right now?

 

I always laughed at you guys for paying so much for gas, but while I was there, we never paid one toll. I guess it balances out, because if we want to get anywhere in less than 3 hours in Miami, we're paying 10 coconuts in tolls. Both ways. Not as bad as the northeast, but almost.

 

Contract roll is tomorrow and it seems the ETF was holding most of the prompt positions. Ouch.

 

Yes or no, can one make a small fortune with the correct gamble right now?

 

Your fault for living in Florida.

 

Yeah but recall the pool palm tree picture with his feet propped up that he posted.

 

That can happen in states not named Florida.

 

https://finance.yahoo.com/quote/Uso?ltr=1

 

And this is a good thing to do?

 

It's going to take a lot of time to get through this glut, but you could see a massive short cover if we get any positive economic news.

 

Just seems like pretty much a given that eventually it gets back to at least $15. Might be 8 months or longer , but almost quadrupling in a year seems pretty nice. Am I missing something?

 

no, but the big problem is these etf's have a lot of tracking error: https://stockcharts.com/articles/ch...rrors---examples-for-uso-and-gld-uso-gld.html

i generally only buy them for short term investments.

you could just buy oil stocks of course

 

Oil at $0. Tried to get my guy to buy 1 or 2 million barrels at that price

 

If it goes back to $15 that would swamp the tracking error right?

 

you’d still make money sure, just not as much as you should

 

Oh lawd yes.

You could get Brent - WTI spread for about $3/bbl a few weeks ago. If you bought that for the April contract, it will expire at $28ish. So, let's say 10x. And the trade was actually a pretty good gamble. Unless you thought the US was magically going to shut-in a ton of production while still having a good price (not happening) or the government was going to mandate cuts (they can't), then it wasn't going to get a lot more narrow. We put that trade on for 2Q (so this is the first expiration). I estimated we had approximately 33% downside with a realistic 500% upside. Never would have guessed that might be 1000%.

Playing basis right now is a high risk game most of the time, but that was an odd opportunity and didn't last long.

 

Yeah, I don't see any room for a good recovery until next year. We are going to put over a billion barrels of oil in inventory over the next 6 weeks. It will take time to draw that down and prices will stay muted until you get back to reasonable inventory levels.

If you believe in a V-shaped recovery, buy 2021 futures. If you believe in a U-shaped recovery, buy 2022 futures. It's one way to play it.