USO
As you know, we are basically taking long positions in crude oil. We have 3 ways to get at the market. That is through the CFDs, Futures and ETFs. We have initiated a trade for the Unit Trust Investors Club and that trade is active. Here I want to give you a trade in the USO ETF which trades the shares of stock. Please note, we have not put up a trade yet in the Self Directed CFDs through the trust because I don’t have the computer software ready yet and doing it manually could be a disaster so bear with me on this one.
As I prepare this trade for you, Crude Light New York is trading around $103 a barrel. USO is trading around $76.50. Our objective is $150 oil. We’re trading the USO and we are BUYING about 300 shares at each average point which will cost us approximately $23,000 which would be very close to a futures margin but removing the futures risk and the fucking your broker is planning on giving you as he changes the rules to the game. You can adjust the positions by the number of shares of stock you buy according to the size of your account.
USO is currently trading around $76.50 a share which for our accounting purposes we’ll call $103 a barrel oil. We will probably add another position every $5 higher or lower basis Crude Light New York but that will vary because our slippage is around 10%. This is aggressive so if you don’t want to be as aggressive, you can BUY every $10 higher or lower. As always, we’ll advise you as we hit average points. My confidence level is at 70% in this trade which in view of the volatility risk, is a reasonable loss parameter.
Oil is right smack dab on the moving average which would suggest a breakout. This close to $2 drop when you look at Brent and Crude Light New York is a nice buy point. I have 3 things that I believe will drive this trade. Putin is about to declare war on Ukraine which ups the ante in the game. The EU is about to completely embargo Russian oil, most of which is delivered by pipeline to Europe. Which means that will force closure of the oil wells which will take 3,000,000 barrels a day out of the market. Third, early indicators show that demand for gasoline and diesel fuel will soar and the fight will be on to buy existing barrels. I could see a situation in the next 6 months where crude oil could hit $200 a barrel.