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Griff posted this below in the OP Pro Chat Room that shows the huge historic spike in Germany producer price index.
My compatriot in Capital Gains, Frank Gregory, would say the spike is due to Germany’s green energy policies limiting their fossil fuel choices to Russian natural gas.
It is hard to disagree with him as Germany is the only country with a PPI this high.
The question for US traders is how to discount the Ukraine invasion. The market is pretty much ignoring it lately, but as anyone can see from the chart, the sanction war has some teeth.
Vol Man covers what he thinks the broad market will do in his weekly piece.
As usual there will be some winners and losers..
Let’s check’em out …
Big Oil Will Continue to Win
Yes folks are down on Big Oil until they need to heat their houses this winter, and then all they want is cheap reliable energy.
Frank has been so right on this issue it is crazy. The more Green we get, the more we will need fossil fuels to make it happen.
Berkshire Hathaway is taking a 50% stake in a big oil company, Occidental Petroleum (Ticker: OXY). Warren Buffet does not want to end up like Germany with no oil, and the trend of tighter oil supplies is not going away.
In Nitro Trader and Cap Gains we are long both ExxonMoble Corp (Ticker: XOM) and US Oil Trust (TIcker: USO).
I also bought Chevron Corp (Ticker: CVX) on dips using call calendar spreads. I use calendars on dips because the front month options usually perk up in price, I sell them in a calendar, and only get moderate bounces higher which is perfect for a call calendar.
Glossary Time! Calendar Spread: An option spread where the trader buys an option in one expiration series, and sells another option in another expiration series at the same strike price. A long calendar spread is when the trader buys to open the back-month options and sells to open the front-month options. A short calendar spread is when the trader buys to open the front-month and sells to open the back-month options.
The trend for oil is still higher as long as this Ukraine issue continues. The Russians are going to use natural gas as a lever to ease the sanctions, so this might get worse before it gets better.
The Rundown
Mark made three nice closes Friday into the selloff …
Vol Edge
– 2x long VIX Futures ETF (Ticker: UVIX) Aug19 9 puts closed for a 50% gain
– The Cboe Volatility Index (Ticker: VIX) Aug17 23 puts, 30-37.5-45 call fly closed for a 79% gain.
Nitro Trader
Nat Gas company Tellerium Inc. (Ticker: TELL) 10 Sep16 4/5 call vertical spread closed for a 60% gain.
And don’t forget about Mark’s undefeated August!
To Your Trading Success,
AG