Weekly Update: November 25, 2015
Weekly Update: November 25, 2015
Big Picture Outlook:
Some surprising geopolitical news sent crude sharply higher in yesterday’s session. As you likely heard, Turkish forces shot down a Russian fighter jet when it allegedly violated their country’s airspace.
Not surprisingly, the details of the situation are murky. Russia and Turkey are both pointing fingers.
Regardless of who is at fault, there’s no question the downing of a Russian warplane raises the stakes in the Middle East.
Will yesterday’s 2.8% rally hold?
From a technical perspective, WTI crude should see additional upside to at least the $45 a barrel area.
However, bears are licking their chops…
Surging US inventories, along with resilient US and OPEC production, have global supplies swelling. If US production doesn’t start turning sharply lower soon, there’s a growing possibility of a swift downturn to the mid-$30 a barrel range.
Let’s check in on 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.
. . . . Market Vectors Gold Miners $GDX December 18, 2015 $16 puts
$GDX tagged our second profit target at $13.00 on November 18th. The downturn sent our $16 puts to a $3.00 bid, which is a 129% gain from our entry.
With both profit targets achieved, only aggressive traders should consider holding a small remaining put position for the possibility of lower prices in GDX.
. . . . ConocoPhillips $COP January 15, 2016 $57.50 calls
Yesterday’s crude oil upturn sent $COP shares jumping back over $55. While the rally is promising, we really need to see $COP retake the $57.50 level.
If it can, there’s a good chance the oil producer will see $60 by our expiration in January. Aggressive traders should keep holding these calls for additional upside in $COP.
. . . . iShares Silver Trust $SLV December 18, 2015 $14 calls
While $SLV hasn’t hit our risk control line at $13.25, it also hasn’t made any bullish progress off technical support. As it sits now, silver may just trade sideways as investors await the December Fed meeting.
Remember, this is a very low risk trade. We have inexpensive call options and a relatively tight stop at $13.25 in $SLV. Keep holding your calls for the potential of higher prices.
. . . . US Oil Fund $USO December 18, 2015 $13.50 calls
Yesterday’s crude rally sent our $USO calls up to a $0.62 bid in early Tuesday trading. That’s a 31% gain from our entry at $0.47. Keep holding these calls, but also keep a close eye on the risk control line at $12.60. Our first profit target is at $14.25.
Until next time,
Justin Bennett
***Editor’s Note*** I hope you all have a wonderful Thanksgiving holiday with friends and family!
Category: Commodity Trading
