buying puts in oil driller/service stocks:
When oil was 10$, I was willing to bet the next major move was up, so I went long RIG and SLB and FSESX. When oil hit 20$, I wasn't sure, so I sold them. If oil hits 30$, I'd be willing to bet that the next major move, from there, will be down. It is really amazing, and a testament to the fact that noone controls (or even manages) the oil market, that 30$ oil is possible, 12 months down the road from 10$ oil. Few other industries do as poor a job at inventory management.
Anyway, is anyone willing to discuss which puts would be the best candidates for a bet on oil going from 30, down to its historical average?
I won't do this unless oil does hit 30$, in which case I'll consider it a sure thing. If it happens, I'm sure there will be lots of people saying oil is going to 40$. Just like the serious consideration people gave last December to the idea of 5$ oil. Markets always overshoot, in both directions, and this gives unemotional people a chance to make money. |
