Crude Light New York
In our speculative trades we go for moon shots and every once in a while, the rocket blows up on the launch pad. This could be such a trade. I hasten to add that my ultra conservative trades, government securities and our beloved STRIPS recently made a return of 15% to 50%.
This oil trade is in Crude Light New York only. You have 3 options for trading. To trade the full blown NYMEX 1,000 barrel contract will take an account funded by $105,000. $50,000 will be my anticipated margin requirement and we have the potential of losing $50,000 and making $200,000.
For those of you that have a smaller account, $50,000. You will simply trade the Minis and you are risking $25,000 with a profit potential of $100,000. For those who have $25,000 we have a strategy for you and you’ll be risking $12,000 with a potential to make $50,000.
The trade rationale is the same for all accounts. You’ll be trading the March futures contract. For the full blown contracts and the Minis you will be adding a position every $1.00 higher or lower without duplicating positions at any average point. For the super small accounts, you’ll be adding a position every $2.00 higher or lower without duplicating positions at any average point. For the full blown account traders we’re looking to add 10 positions basis the March futures contract, entering in at around $77.00. We’ll be trading positions on the short side all the way up to $82.00 ($82.00 in March would be the equivalent of $84.00 on the spot contract) If March goes to $86.00 a barrel, that will take Brent to $90.00.
There is no way in Hell the powers that be will allow $90.00 to $100.00 a barrel oil and there is no justification for this price. Like on so many other things the price plunge of April 20, 2020 temporarily shut down oil and the pipeline literally emptied out then demand crashed. All the oil you could ever want is available. Pipelines have to be restarted. Completed wells will be put into production and with the under investment in energy, bankers are rushing in to get in on the price bonanza.
By March, like every time after we see an oil price plunge and oil over $70.00 a barrel, within 6 months prices plunge right back down again. I see this trade taking us easily to $60.00 a barrel basis March. Do the math. Your average price will be $83.00. I expect to take profits at $63.00 so that would be a profit of $20,000 on 10 contracts, $200,000 in total.
For those of you trading the Minis you’re looking at a profit potential of $50,000 and those of you trading Minis at a $2.00 average point you’re looking at $25,000 but that’s the minimum because as the market drops below our $77.00 average point we’ll be adding more positions on the way down.
Before you make this trade, I urge you to listen to the Market Update posted on October 11th titled “Moon Shot”. To get access, contact Jim at 866-924-0607.