10-07-2022, 12:09 AM
OPEC+ cutting oil production by 2 million barrels/day & here is WHAT TO DO
<!-- SC_OFF --><div class="md"><p>Starting off, we have the news ofc <a href="https://www.cnbc.com/2022/10/05/oil-opec-imposes-deep-production-cuts-in-a-bid-to-shore-up-prices.html">https://www.cnbc.com/2022/10/05/oil-opec-imposes-deep-production-cuts-in-a-bid-to-shore-up-prices.html</a></p> <p>Its quite clear oil prices get effected by this, but when, why, and how to trade them? I personally took a trade on $XOM 3 days ago, resulting in a gain of over +1,400% on options. Why? $XOM specifically was extended quite far to the downside and in my opinion was not priced in for the news. It hovered around $86 for a few days, (9.23.22 - 9.28.22) and held up quite well on the 200 EMA & SMA. I ended up taking the trade expecting price to be around $95 before news came out. The reasoning behind this high price is every economic factor pointing towards OPEC making that oil cut, and ofc why would an Oil & Gas stock be declining when there is high likelihood of supply getting cut? Quite simple trade there, hope I explained it well enough for you to understand.</p> <p>What to do now? There are two ways this could go. We could either continue rallying (highly likely) or we consolidate here, form a good setup, then takeoff. I'm hoping that we will be consolidating here since the Monthly chart has a great flag coming into the 10 SMA. Main candidate would be $OXY instead of $XOM, $INDO/$HUSA are also great. $OXY has a much higher ADR as well as 1/4 of the float size that $XOM does, $INDO and $HUSA are both low float high ADRS (great for explosive moves, harder to trade).</p> <p>For $OXY, the goal here is to get some longer consolidation, it did not react as well as $XOM did which could mean its setting up for a bigger move. There are 2 setups I see on $OXY, 1 being a channel up on 1d chart, and a flag on 1M chart. 1M chart is probably the better one to watch, but if trading options 1d will be very useful. I have a long position on $XOM that will likely be cut soon, at least once I see some consolidation start on a smaller time frame like 1hr or 1d. For $OXY, nothing yet, waiting for either chart to give us greenlight. $HUSA/$INDO definitely need some time to setup, remember all stocks move in stairsteps, catch them sideways, wait for them to pick a direction, and never try to predict them you are not some sort of genie.</p> <p>​</p> <p>​</p> <p>Edit: Market conditions are quite rough, energy is definitely the favorable sector right now. Don't go chasing trades, you will be chewed up. If you are breakeven since the past few months then you are doing well.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/holpaz"> /u/holpaz </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/xwqnvv/opec_cutting_oil_production_by_2_million/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/xwqnvv/opec_cutting_oil_production_by_2_million/">[comments]</a></span>
<!-- SC_OFF --><div class="md"><p>Starting off, we have the news ofc <a href="https://www.cnbc.com/2022/10/05/oil-opec-imposes-deep-production-cuts-in-a-bid-to-shore-up-prices.html">https://www.cnbc.com/2022/10/05/oil-opec-imposes-deep-production-cuts-in-a-bid-to-shore-up-prices.html</a></p> <p>Its quite clear oil prices get effected by this, but when, why, and how to trade them? I personally took a trade on $XOM 3 days ago, resulting in a gain of over +1,400% on options. Why? $XOM specifically was extended quite far to the downside and in my opinion was not priced in for the news. It hovered around $86 for a few days, (9.23.22 - 9.28.22) and held up quite well on the 200 EMA & SMA. I ended up taking the trade expecting price to be around $95 before news came out. The reasoning behind this high price is every economic factor pointing towards OPEC making that oil cut, and ofc why would an Oil & Gas stock be declining when there is high likelihood of supply getting cut? Quite simple trade there, hope I explained it well enough for you to understand.</p> <p>What to do now? There are two ways this could go. We could either continue rallying (highly likely) or we consolidate here, form a good setup, then takeoff. I'm hoping that we will be consolidating here since the Monthly chart has a great flag coming into the 10 SMA. Main candidate would be $OXY instead of $XOM, $INDO/$HUSA are also great. $OXY has a much higher ADR as well as 1/4 of the float size that $XOM does, $INDO and $HUSA are both low float high ADRS (great for explosive moves, harder to trade).</p> <p>For $OXY, the goal here is to get some longer consolidation, it did not react as well as $XOM did which could mean its setting up for a bigger move. There are 2 setups I see on $OXY, 1 being a channel up on 1d chart, and a flag on 1M chart. 1M chart is probably the better one to watch, but if trading options 1d will be very useful. I have a long position on $XOM that will likely be cut soon, at least once I see some consolidation start on a smaller time frame like 1hr or 1d. For $OXY, nothing yet, waiting for either chart to give us greenlight. $HUSA/$INDO definitely need some time to setup, remember all stocks move in stairsteps, catch them sideways, wait for them to pick a direction, and never try to predict them you are not some sort of genie.</p> <p>​</p> <p>​</p> <p>Edit: Market conditions are quite rough, energy is definitely the favorable sector right now. Don't go chasing trades, you will be chewed up. If you are breakeven since the past few months then you are doing well.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/holpaz"> /u/holpaz </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/xwqnvv/opec_cutting_oil_production_by_2_million/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/xwqnvv/opec_cutting_oil_production_by_2_million/">[comments]</a></span>