I’m going to stick to the tradition of updating you all on my real-time thoughts on the oil trade. Please see the write-ups from August 24 and Sept 1:
August 24: Here’s My Game Plan For The Oil Trade
Sept 1: Here’s My Game Plan For The Oil Trade (Sept 1 Update)
As many of you may know, I had significant exposure to the September 18 $55 strike BNO calls. A lot, so my updates focused on those near-term call options.
With 10 days left on those options, the margin for error was close to zero. BNO is currently trading at $57.44, which means the call options are in the money. So even a small decline would materially reduce the options’ value. Given this backdrop, the precarious timing on the sentiment front was a cause for alarm:
Jim Cramer, infamously known for being so bad that you can make money trading the opposite of his calls, wrote that there’s nothing to stop the oil trade.
My goodness. This is on par with The Economist’s headcover.
But all sentiment (jokes) aside, this is how I’m thinking about it.
The oil long trade is far from over. That’s the starting point in understanding why I took the September call exposures off. I want to be in the November BNO strikes. Those are currently unavailable.