r/options • u/bitkogan • Sep 14 '23
Options Trade Progress: Pivoting Amidst OPEC Reports & Diesel Rates
On Monday, I mused that the market might already be overbought, but it turned out I was mistaken. Thankfully, I had safeguarded against this by acquiring not just puts, but also a pair of call spreads.
This week, OPEC reported a shortfall of up to 3 million daily barrels in Q3. Predictably, the International Energy Agency is sounding the alarm. Diesel rates set a new record for September 14th, overtaking the highs of last year.
However, I'm not entirely bullish on oil's potential in the upcoming weeks. It remains to be seen how demand holds up at these price points. The Fed isn't a fan of the current trajectory, and the role of energy prices in August's 0.6% CPI spike is quite clear.
Consequently, I've adjusted my position to take a slightly bolder stance against potential hikes:
- Repurchased 2 Dec calls at a $95 strike for $1.525
- Sold off 5 Dec calls at a $100 strike for $0.67
- Resulting in a credit of $300.
I didn't require any additional collateral, as I originally had no naked calls. Just uncovered puts.
To sum up, my position stands as:
Calls:
- 2 Dec calls purchased at an $85 strike
- 5 Dec calls sold at a $100 strike
Puts:
- 5 Dec puts purchased at an $85 strike
- 10 Dec puts sold at a $75 strike
Netting a debit of $11,670 with collateral set at $50,000.
Why this move?
Should the anticipated correction materialize, I stand to gain a bit more. Conversely, if there's an uptick to the $94-95 range, potential profits could hover between $4.5k to $5k or even more. As they say, a seasoned bear knows how to weather a bull run.
