71 on shorting oil - cougarguard.com — unofficial BYU Cougars / LDS sports, football, basketball forum and message board

jay santos · 01-07-2008, 08:19 PM

'71 I read your post on CB. I must admit I'm a little ignorant these days on the specifics on this sort of thing. Did some options for fun back in the day, but it's been a long time.

I have to understand this somewhat for my job so I know a little about oil.

I agree that $100 for oil is awfully darn high. I believe oil majors are using somewhere half or less than that for their assumptions for capital projects. I've heard experts say current supply and demand should equate to an oil price around $50. And that the high price is based on irrational speculation and short term supply issues that change weekly.

So, I like the idea of shorting oil. But being an efficient market guy, I would think the market has accounted for this short term issue so that long term oil puts price oil much lower than $100 and the further you went out, the lower you get.

1. What's the furthest time period out you can put oil?
2. Can you get a price greater than say $50 for anything a year or more out?
3. Where do you go to do this?

BYU71 · 01-07-2008, 09:12 PM

Quote:

Originally Posted by jay santos

'71 I read your post on CB. I must admit I'm a little ignorant these days on the specifics on this sort of thing. Did some options for fun back in the day, but it's been a long time.

I have to understand this somewhat for my job so I know a little about oil.

I agree that $100 for oil is awfully darn high. I believe oil majors are using somewhere half or less than that for their assumptions for capital projects. I've heard experts say current supply and demand should equate to an oil price around $50. And that the high price is based on irrational speculation and short term supply issues that change weekly.

So, I like the idea of shorting oil. But being an efficient market guy, I would think the market has accounted for this short term issue so that long term oil puts price oil much lower than $100 and the further you went out, the lower you get.

1. What's the furthest time period out you can put oil?
2. Can you get a price greater than say $50 for anything a year or more out?
3. Where do you go to do this?

I am checking into that . I don't do commodities and never have, so I am totally in the dark there.

There is an ETF that tracks oil. The symbol is USO. One could short that stock, but it would tie up a good chunk of change. You can also buy put options on the ETF, but the premiums look expensive. I only looked at the ones 3 months out. I wouldn't buy those personally.

I got busy taking care of a few clients and didn't really follow up.

I get a feel for when we are near a high and I think we are there. My problem is that feeling can be a year premature. I sold my clients out of Cisco for example in 1999 at $56. They weren't too happy when it kept going up to $72 in 2000. We had bought it at $9, I thought $56 was good enough and the COMP was way over priced at 4200. Of course it went to 5000.

About a year and a half ago I thought housing and real estate was over priced. I am early on this stuff and that is why I mentioned I need to find something I can hold for at least a year for this to work.

Filsdepac · 01-08-2008, 01:57 AM

How about DUG, an ETF that is ultra short oil? For those unfamiliar, in theory it should go up 2% every time oil goes down 1%. Of course, the inverse is true as well.

BYU71 · 01-08-2008, 01:56 PM

Quote:

Originally Posted by Filsdepac

How about DUG, an ETF that is ultra short oil? For those unfamiliar, in theory it should go up 2% every time oil goes down 1%. Of course, the inverse is true as well.

Thanks

BYU71 · 01-08-2008, 07:03 PM

Quote:

Originally Posted by Filsdepac

How about DUG, an ETF that is ultra short oil? For those unfamiliar, in theory it should go up 2% every time oil goes down 1%. Of course, the inverse is true as well.

I stepped up to the line and bought these today at $37.66, wish me luck. If I win, it will be good for the little guys at the pump and Mike W. can share in my happiness.

BYU71 · 01-09-2008, 10:01 PM

Quote:

Originally Posted by BYU71

I stepped up to the line and bought these today at $37.66, wish me luck. If I win, it will be good for the little guys at the pump and Mike W. can share in my happiness.

I stepped out today. Something looked weird. Crude down and this was down. How the hell is crude going down and I am short it and I am losing value.

Checked it out in more detail. This is tied somehow to the oil stocks in the Dow or the Dow oil index or something like that. It follow oil stocks though and they were up.

I got out. It is OK, I made $300 bucks after commissions, but I was up $600 after yesterday. Not bad for not knowing what the heck you were invested in.

Filsdepac · 01-10-2008, 07:19 PM

Yeah, I should have put a "do your own dd" disclaimer, as I didn't know much about the ETF, other than the name.

I like SBS, although it hasn't done anything for me in awhile. It's Brazil, which is soooo played out, but it's water in Brazil. I've had that and SID for awhile.

BYU71 · 01-10-2008, 07:21 PM

Quote:

Originally Posted by Filsdepac

Yeah, I should have put a "do your own dd" disclaimer, as I didn't know much about the ETF, other than the name.

I like SBS, although it hasn't done anything for me in awhile. It's Brazil, which is soooo played out, but it's water in Brazil. I've had that and SID for awhile.

Well obviously shorting is commodities isn't something I am familiar with. I do know oil is down about 5% since we started talking about it.

Filsdepac · 01-10-2008, 07:52 PM

Quote:

Originally Posted by BYU71

II got out. It is OK, I made $300 bucks after commissions.

When calculating those commissions, I assume you accrued for my fees as I haven't yet sent out my bill.

BYU71 · 01-10-2008, 09:25 PM

Quote:

Originally Posted by Filsdepac

When calculating those commissions, I assume you accrued for my fees as I haven't yet sent out my bill.

lol

01-07-2008, 08:19 PM	#1
jay santos Senior Member Join Date: Jan 2006 Posts: 6,177	71 on shorting oil '71 I read your post on CB. I must admit I'm a little ignorant these days on the specifics on this sort of thing. Did some options for fun back in the day, but it's been a long time. I have to understand this somewhat for my job so I know a little about oil. I agree that $100 for oil is awfully darn high. I believe oil majors are using somewhere half or less than that for their assumptions for capital projects. I've heard experts say current supply and demand should equate to an oil price around $50. And that the high price is based on irrational speculation and short term supply issues that change weekly. So, I like the idea of shorting oil. But being an efficient market guy, I would think the market has accounted for this short term issue so that long term oil puts price oil much lower than $100 and the further you went out, the lower you get. 1. What's the furthest time period out you can put oil? 2. Can you get a price greater than say $50 for anything a year or more out? 3. Where do you go to do this?

01-08-2008, 01:57 AM	#3
Filsdepac Junior Member Join Date: May 2006 Location: Mountain View, CA Posts: 68	How about DUG, an ETF that is ultra short oil? For those unfamiliar, in theory it should go up 2% every time oil goes down 1%. Of course, the inverse is true as well. Last edited by Filsdepac; 01-08-2008 at 01:59 AM.

01-10-2008, 07:19 PM	#7
Filsdepac Junior Member Join Date: May 2006 Location: Mountain View, CA Posts: 68	Yeah, I should have put a "do your own dd" disclaimer, as I didn't know much about the ETF, other than the name. I like SBS, although it hasn't done anything for me in awhile. It's Brazil, which is soooo played out, but it's water in Brazil. I've had that and SID for awhile.