Weekly Update: July 22, 2015

| July 22, 2015

Weekly Update: July 22, 2015


Big Picture Outlook:

Believe it or not, WTI crude is back below $50 a barrel…

Today’s EIA inventory report revealed US crude storage levels are once again on the upswing.  For the week of July 17th, oil inventories rose by 2.5 million barrels to 463.9 million.

Folks, the US still has a drastic oversupply problem.  Even with US gasoline demand surging by nearly 7% over the same time last year, there’s ample crude swashing around the system.

How low will crude go?

With the summer driving season more than half way through, it’s not long until gasoline demand cools and inventories start building at an even more rapid pace.

Unless US oil explorers slow production drastically in coming months, there’s a growing chance of crude falling back into the low $40 a barrel range.

Let’s get to a few of our open positions…


Portfolio Highlights:

Editor’s Note: I won’t update every open position in every update.  I focus on the positions with significant news or price movement.

. . . . SPDR Oil & Gas Exploration & Production ETF $XOP September 18, 2015 $48 puts

$XOP set a new yearly low in recent trading!

With the price of oil back under $50 a barrel, oil exploration and production companies are taking a swift kick to the jaw.

But that’s great news for this trade!

Our $XOP $48 puts have exploded in value the past few days.  In fact, these contracts had an $8.55 bid this afternoon, which is a 228% gain from our entry at $2.60.

If you’re still holding a few of these puts, be sure to take some more profits to the bank. 

However, with expiration still months away, there’s plenty of time to see $XOP fall even further!  So if you’re overly aggressive, keep of few of your contracts in your hip pocket- just to see what happens!

. . . . SPDR Gold Trust $GLD September 18, 2015 $107 puts

I don’t know about you, but I sure like collecting 100% gains in less than a week!

The price of gold fell precipitously the past few days as investors realized the significance of the break of technical support at $1,150 an ounce late last week.

Our $107 $GLD puts jumped to $4.30 a contract in this morning’s trading, which gave us a gain of 104% from our entry at $2.10.

As long-time readers know, I always suggest you take some profits off the table whenever we get a 100% gain in a trade- regardless of whether the first profit target is hit or not.

Speaking of which…

Our first profit target at $104 was narrowly missed this morning. With some time however, I believe $104 and our second target at $100 will be hit.

Keep your remaining $GLD put contracts for continued downside in gold!

. . . . Transocean $RIG August 21, 2015 $16 calls

Due to the abrupt downturn in oil industry stocks the past few days, $RIG couldn’t form the rally we needed.  As you’re likely aware, $RIG hit our $13.90 risk control line on July 17th.

If you’re conservative, you should already be out of this trade.  If you’re aggressive, you can keep holding for a potential rebound in $RIG.


Category: Commodity Trading