11-20-2021, 04:04 PM
The Final Oil Short of 2021
<!-- SC_OFF --><div class="md"><p>Hi all,</p> <p>If you check out my history, you'll know that I went long on oil stocks and sold out most of my position a while back (OXY, OVV, HP). I lucked out on HP as I sold it the day before earnings, which resulted in a 14% correction as HP is still incurring massive loss.</p> <p>The reason I sold were twofold: (1) oil made a massive rally from September to October, so profit taking is warranted; (2) UK and EU covid cases were and still are trending up, and the bigger point is that the US chart is showing the same direction.</p> <p>On this COVID cases situation, once new cases start rising, it will not stop going up for 2-4 weeks when new cases plateu and then start trending down. If you check back this year, new COVID cases and oil price follow an almost perfect reverse graphs. Easy to understand: more lockdown means less energy needed.</p> <p>So just holding cash is not good enough for me. I feel that the market still has not fully priced in this final oil price correction. As such, I bought puts on some of the same oil companies I went long previously that have the most exposure to oil spot price. I avoid the ones with the most pristine balance sheet (OVV) in favor of the one with the most troublesome debt burden (OXY). Experience watching these stocks tell me that OXY has a lot more room to fall in the case of an oil price slump than those with better earnings.</p> <p>I predict that this will be the final wave of COVID as far as the world is concerned. After this, society will be too jaded and fatigue to do any serious curtailment or lockdown.</p> <p>Let me know your thoughts.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/pml1990"> /u/pml1990 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/qxif6d/the_final_oil_short_of_2021/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/qxif6d/the_final_oil_short_of_2021/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Hi all,</p> <p>If you check out my history, you'll know that I went long on oil stocks and sold out most of my position a while back (OXY, OVV, HP). I lucked out on HP as I sold it the day before earnings, which resulted in a 14% correction as HP is still incurring massive loss.</p> <p>The reason I sold were twofold: (1) oil made a massive rally from September to October, so profit taking is warranted; (2) UK and EU covid cases were and still are trending up, and the bigger point is that the US chart is showing the same direction.</p> <p>On this COVID cases situation, once new cases start rising, it will not stop going up for 2-4 weeks when new cases plateu and then start trending down. If you check back this year, new COVID cases and oil price follow an almost perfect reverse graphs. Easy to understand: more lockdown means less energy needed.</p> <p>So just holding cash is not good enough for me. I feel that the market still has not fully priced in this final oil price correction. As such, I bought puts on some of the same oil companies I went long previously that have the most exposure to oil spot price. I avoid the ones with the most pristine balance sheet (OVV) in favor of the one with the most troublesome debt burden (OXY). Experience watching these stocks tell me that OXY has a lot more room to fall in the case of an oil price slump than those with better earnings.</p> <p>I predict that this will be the final wave of COVID as far as the world is concerned. After this, society will be too jaded and fatigue to do any serious curtailment or lockdown.</p> <p>Let me know your thoughts.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/pml1990"> /u/pml1990 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/qxif6d/the_final_oil_short_of_2021/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/qxif6d/the_final_oil_short_of_2021/">[comments]</a></span>Kind Regards R