I apologize for yesterday.
In the morning post I suggested shorting those 376,000 NYMEX contracts again after inventories on the cross below $100.50 with the goal of making another $1.2Bn but, unfortunately, oil only fell to $98.50 on that cross and we had to bail out in Member Chat at 11:30 when I said to Members: “Same as yesterday except we started at $101.50 so $98.50 is good for an exit on oil and that’s $1.70 on the USO June $40 puts and that’s a nice gain too so all done in the $25KP and the futures for now!” Sadly, for non-Members who came in at $100.50, that meant the 376,000 contracts only made $752M for the day – although we did get a chance to reload at $101 in the evening and oil fell back to $98.50 again so there’s another $940M to be made in after hours trading for the night owls.
You “only” need about $3Bn in margin to trade all those contracts so I’m waiting for the White House to call and hand me the keys to the SPR and give me a little seed money and we’ll have that deficit wiped out in no time – along with all those jokers at the IBanks, who are now facing some serious opposition as they attempt to manipulate the oil markets. $101 remains our magic number – we are very happy to contract to sell barrels for $101 to anyone who wants to pretend they want to buy them for that price. At some point, we’ll establish a new range to trade in and we’ll adjust our targets but, for now, making $2.50 on dips between $101 and $98.50 is $2,500 per contract so we’ll take that when we can.
We had an extensive conversation about scaling in and out of futures positions and setting stops in Member Chat, so I won’t go over it here again but always keep in mind that futures trading is very dangerous and certainly not for everyone. That’s why, in our 9:56 Alert to Members, I suggested using the USO June $40 puts at $1.19 as an alternative to the futures. With a put, you limit your losses to that $1.19 per contract, which is $119 per 100-contract option so you could stop out at, for example, $1 for a net $19 loss. So, rather than pick up…
