Weekly Update: July 8, 2015

| July 8, 2015

Weekly Update: July 8, 2015

 

Big Picture Outlook:

No doubt about it, the bearish bullish points are building for oil…

Chinese growth worries are coming front and center, the Greek debt crisis is going down to the line, and over-supply worries just won’t go away.

All these factors have the price of WTI down nearly 16% from the highs set in late June.

It’s not pretty.

Where do we go from here?

Given the growing economic worries from China and Europe, there’s a distinct possibility crude falls back into the high $40 range.

Remember, we’re smack dab in the middle of the peak summer demand period.  As a result, oil investors have already factored in any bullish effects of this phenomenon.

That leaves little to be excited about for oil prices from a fundamental standpoint- at least in the short-term.

Thankfully, we profited handsomely on our trade in the SPDR Oil & Gas Exploration & Production ETF $XOP.  The recent crude downturn sent oil stocks plummeting to the lows seen earlier this year.

With $XOP hitting our second target at $43.00 in yesterday’s session, our September 18, 2015 $48 puts rallied to $5.45 a contract- a 109% gain from our entry.

With both profit targets achieved, make sure you collect some profits on this trade!

If you’re aggressive, you can keep holding a small remaining put position for further downside in $XOP.

Let’s check in on a few more of our open trades…

 

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.

. . . . iShares Silver Trust $SLV July 17, 2015 $16.50 puts

The price of silver fell through the floor yesterday…

The commodity collapsed as low as $14.62 an ounce before recovering slightly in today’s session.  The recent downturn sent our $SLV puts soaring to $2.19 a contract yesterday- a 226% gain from our entry at $0.67.

Expiration is approaching quickly in this trade, so have an exit strategy in mind.  Since these puts are deep-in-the-money, you’ll need to close this trade by July 17th– next Friday.

. . . . Market Vectors Gold Miners $GDX July 17, 2015 $19 puts

Gold stocks are taking a beating right now…

Thanks to the downturn, $GDX is hitting our second profit at $17.00.  As a result, our $19 puts have jumped to $2.00 a contract.  That gives us a 159% gain!

With both profit targets achieved, make sure you take the majority of the profits off the table.  If you’re overly aggressive, you can hang onto a few contracts for the possibility of additional downside in $GDX!

. . . . Silver Wheaton $SLW July 17, 2015 $18 puts

Aggressive traders just caught a windfall in $SLW!

The silver streaming company is falling precipitously on the undeniable weakness in silver prices. Our $SLW July $18 puts jumped to a $2.80 bid in today’s trading- that’s a whopping 449% gain from our entry at $0.51!

If you caught this downturn in $SLW, I’d like to hear from you.  Send me the details at [email protected]

. . . . Whiting Petroleum $WLL September 18 $36 calls

As I mentioned last week, $WLL hit our risk control line at $33.50 on July 1st.  As a result, conservative investors should already be out of this trade.

For all you aggressive traders that are still in- while a bounce in crude oil is certainly a possibility, the energy markets are suddenly looking quite gloomy.

As you may know, we saw a sharp bullish reversal in oil names in yesterday’s session.  However, the bullishness didn’t leak over into today’s session, which opens the door for more bearish uncertainty.

 

Category: Commodity Trading