Yo, Pit Crazies,

Get ready for my Easy Button coming in a few weeks.  Trading made easy.  In the meantime check out what Mark is doing.

2022 will go down as one of the most volatile years in the last 15.  90% of all of the volatility was policy related from the US Gov and the Federal Reserve.  The Russian Invasion of Ukraine only exacerbated policies that were bound to run into trouble. 

One thing that is not going away anytime soon is inflation.  It might be reducing velocity but it is still there.  We want lower energy prices but that is not the current policy in the G7. They think price controls on Russian oil will work just like it did in the 1970’s. Our current polls are a bit short on history and since most of the party’s leadership is 70 or older they do remember how that all worked out.

This is an epic energy setup

US Job growth is still pretty good

While my students know I can be grumpy sometimes I am more upbeat than most about the economy.  Job growth is bullish and the tailwind from the post-Covid opening is still with us.  I thought 2022 would see more of that but the Fed necessarily had to put on the breaks from the insane spending over 2020-2022.  Growth is good for energy prices.  If China can ever get out of its malaise and 0 COVID nonsense energy demand will go back up in a hurry. 

My Edge Hunter VBS sheet is saying IV is a bit high in the US Oil Fund (Ticker: USO).  Not hugely high but too high to buy options. Note the implied vols are running over the current realized vols and straddle values are a bit pricey.

I do like the idea of 1 x 2 put spreads in USO around the recent lows.  I don’t how a price cap on Russian oil is bearish.  It never has in history so I assume the same thing will happen again.  I expect to add another oil stock to the Div+ strategy this week.

VBS stands for Vol Buy or Sell and right now it is leaning to sell.

To Your Trading Success,

AG