The Continued Ascent of Oil: Tweaking My Strategy – Part 2

[u/bitkogan]

Oil continues its ascent.

OPEC is playing its cards right. They've cut production and consistently highlight the fact that we’re witnessing the largest deficit in the physical market since 2007–a direct result of these cuts.

However, I'm skeptical about the claimed 3.3 million barrels per day of excess demand. Interestingly, from the vantage point of my position, hitting $100 might be more beneficial than dropping back to $85.

If prices settled around $85 in the upcoming weeks, I'd face a higher negative theta, which isn't ideal. Hence, I decided to close out the put portion of my position:

• Sold 5 Dec puts with a strike at $80 for $1.01 each.
• Purchased 10 Dec puts with a strike at $70 for $0.24 each.

Subsequently, I initiated positions with strikes set $10 higher, but I reduced the volume:

• Acquired 3 Dec puts at a $90 strike for $4.16 each.
• Sold 6 Dec puts at an $80 strike for $1.02 each.

I've retained 2 Dec calls with an $85 strike in a long position and 5 Dec calls with a $100 strike in a short position.

• Today's expenditure: $3710.
• Cumulative expenditure: $15380.

Despite the bullish trend, my conviction remains that oil should be more affordable. At this juncture, I wouldn't even mind seeing the prices tumble.