Comments on: Sold UCO December 13 Naked Puts

By: Alex Fotopoulos

Alex Fotopoulos — Fri, 06 Nov 2009 18:21:52 +0000

Exactly. As with most of my positions, the underlying security has room to drop some and still leave me with a profit. Therein lies the beauty in selling out of the money naked puts. I’d almost prefer a slight dip by expiration so I can re-write the contracts without having to chase oil higher.

By: mule65

mule65 — Fri, 06 Nov 2009 18:17:04 +0000

Michael, the price of oil doesn’t need to rise for this trade to make money.

By: Alex Fotopoulos

Alex Fotopoulos — Fri, 06 Nov 2009 13:06:45 +0000

Michael, I think the economy will turn eventually and the price of oil will rise with the increase in demand. I expect the short term to remain volatile, but with my cost a couple of bucks below the current price for UCO I don’t see a huge amount of risk for it. Oil isn’t going to $0 ever and I’d be shocked to see it below $50 (and probably not below $60) any time soon. China and the Middle East always factor in, but that’s a constant so I can’t say that changes my thought process this month vs any other. It’s going to be years before the more fuel efficient cars make a difference, especially when you offset that with people who (one day) will be back on the roads driving to work again.

By: Michael

Michael — Fri, 06 Nov 2009 02:05:47 +0000

Since you sold the naked puts on the etf, you are expecting a rise in the price of crude oil – how do you think the dismal US economy will effect the price in the short term? If people are losing jobs, not spending, and buying more efficient cars, what do you see as the catalyst for the price of crude going forward? China / Iran / Israel? (I used to trade the DXO until it was closed down).