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President Biden turned on the taps for the Strategic Petroleum Reserve (SPR) because … prices are high.
I don’t know about you, but I thought the fastest way to bring down prices is to increase supply. To do that effectively, wildcatters have to borrow money to drill. They have to take a risk and they won’t do that when the ground is (figuratively) changing beneath them.
That is the big issue as Big Oil is not investing in new wells.
And Europe does not want Putin’s gas any more so it needs a different source.
So how did the market react to 180 million barrels coming online in the next six months?
Not how you might think.
Oil Is Not Getting Sold Into The Release of SPR
I thought the release would have a bigger effect on ExxonMobil Corp (Ticker: XOM).
It did not … and take a look at all the oil majors and nat gas drillers. They are not at the panic high we saw when Russia first invade, but prices are holding up well for these stocks:
Five-day XOM with implied volatility falling to the floor bottom chart.
When Frank Gregory, my partner in Capitol Gains, predicted oil and gas was going straight up last year, part of his thesis was we need mucho fossil fuels to make green energy.
It sounds kind of nuts, but it is true – and it has paid off huge for us, most recently with a 47% win in Petrobas (Ticker: PBR) and a 46% win in XOM that we closed last week.
Now European nations don’t not want to deal with Putin anymore so who are they going to turn to?
Their old reliable NATO partner the USA.
This week, Frank and I will lay down the regulatory landscape that will set the stage for higher prices in the short term – and we will be ready. Stay tuned for an big event this Thursday.
The Rundown
Capitol Gains w/ Frank Gregory
My short put spreads in Petrobras SA (Ticker: PBR) are holding up my Intel Corp (Ticker: INTC) call spreads. Frank and I have put on 11 trades in 2022 – and have eight wins closed, just one loss and two open.
I’ll send you details tomorrow on our no-cost live event coming up on Thursday!
Power Income Trader
Bill closed four iShares 20 Plus Year Treasury Bond ETF (Ticker: TLT) May20 138/141 put spreads closed for a 22% gain. The Power Income Trader continues to cook.
Option Shopper
Licia went shopping in Vale SA (Ticker: VALE)
Apr14 20 calls closed for a 21% gain …
and Wells Fargo (Ticker: WFC) Apr14 50/45
put spreads closed for a 54% gain
Licia’s replay is here – well worth joining her in Option Shopper.
Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session.
This #FridayAlgoChallenge has Dan winning big!
Trading Legion
I bought some SPDR S&P 500 Trust ETF (Ticker:SPY) April 20 455/445/435 put flies with just one upside SPY call Wednesday.
I closed the put flies up 70% and now I am riding a straddle for almost nothing to April 20. Let’s see how much it pays.
Volatility Edge & Volatility Trading Club:
The Option Pit VIX Light Is Red. Even with the selloff on Thursday, VIX closed well in contango, which is still bearish VIX.
In Volatility Trading Club trades No. 286 and 287, I own upside Proshares Ultra Short QQQ (Ticker: SQQQ) call flies and downside SPY put flies against VIX puts. Both trades are running green. I sold SPY put flies in 287 and have the VIX April 20 20 puts for near nothing with three weeks to run.
Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!
To Your Trading Success,
AG
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