Posts Tagged ‘OIH’

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since then, oil has hit a multi-year low at around $42.50 and is now approaching $60, still well below its highs of 2014 but probably closer to a breakeven price for American shale producers. In this post I want to see what ETF would have profited best from that rebound and also which one would have fared worse. Let's look at a couple of performance charts. First, the standard oil proxies based on the futures:

Oil (red) is up 40% since March 17 but what is interesting is how the pure oil ETFs are tracking that move. USO (blue) which is not leveraged is not tracking very well. In fact, it's up only about 27% or about 2/3 of the oil move. As expected, SCO (pink) is down, but clearly, the leveraging is not the 2x that you would expect as it's only down a bit less than 40%. And UCO (green), while the clear winner here, is only up 57% which is lower than the advertised 2x leverage factor. Once again, these future based ETF are victims of some decay.

Let's look at some ETFs not based on oil futures but who should benefit from an oil price rebound. In the next performance chart, we'll look at OIH and XLE. 

It's not surprising that there should be a lag between the time oil prices start…
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More Monday Morning Foolishness – Playing a Rigged Game

Click to ViewThink Mcfly, THINK!

Forget the rhetoric, forget what Cramer says – or any of the other idiots on what used to be accurately called "the idiot box."  Just look at this one, simple chart (thanks Doug Short) and tell me – why on earth would the Fed step in and take emergency action when the market is at a multi-year high?  

Have they EVER done this before?  EVER?  Has ANY Central Bank EVER taken emergency liquidity measures when their stock market was at or near their all-time highs?  And look at the interest rates (the red line) – there's nowhere to go folks – not unless the Fed is going to start PAYING US to borrow money.  In which case – sign me up for $10Bn…

This is the point that was made this week on the cover of Stock World Weekly, and my comments in "The Week Ahead" section were:

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Monday Market Momentum – Use It Or Lose It

SPY 5 MINUTENow we need follow-through.

I think we've already blown the opportunity.  In Stock World Weekly we discussed the stealth bailouts jammed into the Transportation bill on Friday which rightly sent the markets flying higher into the close of the quarter (I know quelle suprise!).  As noted by David Fry, GS was working hard behind the scenes to make sure that, in the end, Germany toe'd the line.

For the year so far, the Dow is up 3.89%, S&P is up 6.66% (so you KNOW Goldman is involved), the Nasdaq is up 10.81%, NYSE 2.33% (all of it gained on Friday) and the Russell 6.15%.  See how great everything is?

We took the money and ran, again, as we hit some clear resistance lines (see SWW) on our Big Chart and there was no sense risking a 10% gain in our first week in our new $25,000 Portfolio with the July 4th holiday coming up (we have a half-day tomorrow and we're closed on Wednesday).  

The only trades we left active in the $25KP was 5 OIH July $35 calls at $1.25 (still $1.25), 10 DIA July $129 calls at $1.10 (now $1.35) and 10 SQQQ July $49/53 bull call spreads at $1 (now .75) we added later in the day to protect them in case we had a big dip this week.  If we make it through Friday above the lines on our Big Chart – then we will continue to be "constructively bullish" and we'll be happy to deploy more cash but, into 2 days off – NO THANKS!  

In fact, as we're already up 22% on the DIA calls – if we get another pop this morning, those are likely to come off the table as well.  After all, how much money should you expect to make in 48 hours?  This is a very unnatural and manipulated market and it's great to play it – as long as you keep that in mind!  The danger comes when you delude yourself that this is some kind of "investing" environment when it's actually just gambling ahead of Q2 earnings reports – that could send us right back into a tail-spin.  

Or, maybe not – as a key amendment to the Transportation Bill will add Billions of Dollars in profits to the S&P 500 by allowing Corporate Pension Plans to use the average…
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Thrill A Minute Thursday – Will the Bernanke Bounce Hold?

SPY DAILYNot much happening overnight.

Dollar at 80.30 as we wait on Bernanke at 9:30.  The Euro is still dead at $1.296, Pound up to $1.615 as BOE holds rates steady (easing was expected). 79.65 Yen to the Dollar and 1.201 EUR/CHF shows those guys are still serious about supporting the Euro at all costs – and it must be costing them a fortune to do this.

I would say anyone who is holding large Euro positions and isn't taking advantage of the fact that the Swiss are backstopping it to get out is very foolish. The Euro is closer to dissolving now than it was last year. Greece will default on $500Bn in debt, Portugal will either default or need a huge bailout, as will Spain and just because Italy and France and Ireland are quiet at the moment, doesn't mean they are fixed either.

Clearly the only reason the Euro is holding $1.29 is because the Swiss are buying it – this is certainly not a reason to be holding the currency. If the Dollar were only staying over 80 because Canada was buying them to keep the Loonie from going to $1.20 – would that mean you should stay in or get out before the game falls apart?

If the Euro is artificially strong, then the Dollar is artificially weak and if the Dollar begins to rise (and the BOJ would love to see that) then we know there will be a dip in the price of dollar-denominated equities and commodities. So we need to continue to tread carefully because much of what we currently see is based on this artificial construct of a relatively weak Dollar and a relatively strong Euro – and that's distorting reality in many ways.

Also keep in mind that these little CB money-printing schemes can go on much longer than one would think logical so it's more of a big-picture sort of observation than an actionable item other than I sure wouldn't want to tie up too much money in Euros – just in case the SNB does run out of money one day

The S&P did put in a solid show of holding around 1,360 and that's all it takes sometimes – just one of our majors to hold their 5% lines can give the others reason rally back…
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Whipsaw Wednesday – Dip Buying or Just Dips Buying?

SPY DAILYWas that it?

On February 24th I wrote "TGIF – Sell in March and Go Away?" and I laid out my case for why I thought we were going to fall off the table in March and we have, indeed, fallen right off the table right on schedule since then.  I said that Friday, that the post was intended as a bookend to my September 30th bottom call as I felt that we had captured all of the upside we were likely to see off the "good news" that Greece was "fixed" and the economy was "improving."  

I'm not going to say anything bad about the economy here, I'll let Michael Snyder do that with his "15 Potentially MASSIVE Threats to the US Economy over the next 12 Months" – I think he pretty much covers it!  8 trading days ago (2/24), we had two short trade ideas in our Morning Alert to Members, they were:

  • SQQQ April $13/17 bull call spread at .70, still .70 (even) 
  • DXD April $13/15 bull call spread at net .55, now .70 – up 27%

SPY WEEKLY In Member Chat that day, Exec asked if I was getting bearish and my response was:  

Bearish/Exec – Are you kidding, this is me painting a sunny picture! Give me a few drinks and I'll tell you how off the rails the Global Economy is right now… Do you know how much Kool Aid I have to consume not to scream short on every single stock I see. CAT $116, CMG $386, DIA $130, GMCR we already did at $70, IBM $200, KO $70, MA $415, MCD $100, MMM $88, MO $30, MON $80, MOS $59, OIH $45, PCLN $593 (did them too), QQQ $64, SPY $137, TM $85, USO $41.50 (got 'em), UTX $84, V $117, WYNN $119, XOM $87, XRT $59 (got 'em) – and that's just off my watch list of stock I like to buy when they're cheap! We are not just priced for perfection, we are priced for perfection plus a return to full employment a forgiveness of all debts without write-downs and inflation without rising interest – we are priced for Nirvana!

It's a big list but, of course, they are pretty much all winners now, with PCLN the notable exception (so far).  Later that day, during Member Chat, we
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News Corp. Options Predict Pie In The Face For Bears

Today’s tickers: NWSA, OIH, FRX & NVLS

NWSA - News Corp. – The phone hacking scandal that dragged Rupert Murdoch’s media empire through the mud won’t stifle shares in News Corp. forever, by the looks of one massive transaction in long-dated call options this morning. Shares in NWSA dropped more than 25.0% to as low as $13.38 in the weeks following well-publicized allegations that News of the World hacked murder victim Milly Dowler’s mobile phone. Efforts by Murdoch & Murdoch to apologize for actions they said occurred without their knowledge at the company’s tabloid, as well as other steps taken recently to soothe investor concerns, helped shares in NWSA recover in August. The stock still stands roughly 14.0% off its highest point in July, after slipping 1.3% during today’s session to $15.98 as of 12:00 pm in New York.

Huge prints in January 2013 contract call options on the media company within 30 minutes of the opening bell today suggests one big player sees shares in News Corp. not only recovering over the next year and a half, but also possibly rising to their highest since 2000. Just before 10:00 am ET, a QCC order to buy a 50,000-lot Jan. 2013 $20/$25 call spread at a net premium of $0.90 per contract was entered at the PHLX. The QCC order, which allows valid and executable orders to immediately cross upon arrival with no auction, protects the anonymity of the trader and involves a stock component executed away from the Exchange on which the options were crossed. It is unclear what the stock component is at this time, but it’s worth noting that such knowledge could alter one’s interpretation of the transaction. Keeping that disclaimer in mind, it appears the call spread is looking for shares in News Corp. to…
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Income Portfolio – Month Four – Stormy Weather!

Riders on the storm 

Into this house we're born 

Into this world we're thrown 

Like a dog without a bone 

An actor out alone 

Riders on the storm 


What a crazy couple of week's we've been having!  Very fortunately, in last month's update of our virtual income portfolio, we had already cashed out $33,084 – more than enough to take us through our first 8 months (our planned $4,000 a month to live on).  We did that using just $200,000 of our $1M in buying power ($500,000 portfolio), staying very conservative and waiting for a bigger dip than the one we had had in June.  

Well, here we are!  We are now 10% below June's bottom and we did do a little bottom fishing, adding positions in WFR, SONC, IMAX, VLO, OIH, TBT and HOLI – positions we'll be reviewing below.  To a large extent, we followed the strategy I called "Don't Just Do Something, Stand There" during this sell-off although it was (and still is) a nail-biter as we tested my August 2nd prediction of the "worst-case" scenario of a 20% drop from the top.  

We stuck to our guns this week and had a lot of fun playing the wild gyrations with our short-term betting but the Income Portfolio is an exercise in managing a "low-touch" portfolio – one that does not require us to make daily adjustments.  I am aware that can be frustrating for people who stare at the markets every day but that is what our short-term trade ideas are for in Member Chat.  That goes for people who are retired or semi-retired too.  You don't HAVE to play every day – or any day for that matter but you do need to…
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F’ing Thursday – Give Us a Break!

Holy cow – when will it end?  

As I mentioned yesterday, we were expecting a whipsaw after the morning sell-off and we played that perfectly with bullish trades on the DIA and OIH and, as we move up, we took bearish plays on GLL, TZA and QQQ.  All good so far but then we did a little bottom fishing before wising up and shorting USO into the close – just in case.  The futures were up 2% this morning at 5am and I had to warn our Members:  

Overall, this is too weak to get us over the hump and we are going to have to lean a little more bearish unless we can follow Europe up 2.5% or more.  Our charts will turn from "spiking low on volume" to "consolidating for a move below 20%" very quickly if we don’t gets something bullish going by tomorrow.  

The Dollar was at 74.64 at the time and it’s only 75.04 now (7:50) but the futures have gone from up 2% to down 1% in less than 3 hours – that is insane!  How are retail investors supposed to play this market?  The average person does not have the stomach for watching their virtual portfolio’s value go up and down 5% a day – at some point they are all going to pull the plug and walk away.  Of course, as I was saying yesterday – that’s just what the Banksters want you to do, assuming they know QE3 is right around the corner, accompanied by a 20%+ market rally into the year’s end.  

Anyway, hope is NOT a strategy for the prudent investor so I published another set of Disaster Hedges this morning as it’s time to add a layer to our longer hedges (which are now deeply in the money).  I hate to chase these plays but one thing we learned in 2008 is that there may never be a bottom (not in the short run) no matter how oversold you think things may be.  Was the market wrong in 2008 to go below S&P 1,000?  Well 3 years of subsequent trading seem to indicate that it was – but that did not stop us from dropping 33% lower, to 666 (the mark of the Blankfein!).   

Our entire goal in a sell-off like this is to simply preserve our cash.  The lower we…
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Bullish Player Rigs Up Call Spread on Oil Services HOLDRS Trust

Today’s tickers: OIH, AFFY, CAT, EBAY, IYT & RIG

OIH - Oil Services HOLDRS Trust – Shares in the Oil Services HOLDRS Trust are up 0.50% in the final hour of trading to secure an intraday- and new 52-week high of $147.34. One options player expecting shares to continue to hit new highs through February expiration initiated a debit call spread. Shares in the OIH, an issuer of depository receipts known as Oil Service HOLDRS that represent ownership in the common stock of companies engaged in drilling, well-site management and other services for the oil service industry, are up 5.25% year-to-date, and have surged 57.75% since touching down at a six-month low of $93.36 on July 1, 2010. The optimistic options trader looked to out-of-the-money calls expiring next month, buying 3,600 calls at the February $155 strike for a premium of $1.48 each, and selling the same number of calls up at the February $160 strike at a premium of $0.58 apiece. Net premium paid to initiate the spread amounts to $0.90 per contract. Thus, the investor is prepared to make money should the price of the underlying shares rally another 5.8% over today’s high of $147.34 to surpass the effective breakeven price of $155.90 by expiration day in February. Maximum potential profits of $4.10 per contract are available to the call-spreader should shares in the OIH jump 8.6% to trade above $160.00 before the contracts expire. Options implied volatility inched up 3.2% to 26.42% by 3:55pm in New York.

AFFY - Affymetrix, Inc. – Investors are buying call options on the biotechnology company today with shares in the Santa Clara, CA-based firm rising as much as 7.6% during the session to an intraday- and 6-month high of $5.67. Bullish players expecting shares in Affymetrix to continue to rally picked up…
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Near-Term Bulls Shop Around for Call Options at Newell Rubbermaid

Today’s tickers: NWL, GRS, OIH, HIG, EWZ, MBT & XOP

NWL - Newell Rubbermaid, Inc. – The global marketer of everyday commercial and consumer products popped up on our ‘hot by options volume’ market scanner during the second half of the trading session due to bullish activity in the December contract. Shares in Newell Rubbermaid are up 3.35% to stand at $17.33 with 45 minutes remaining before the final bell. Options traders exchanged more than 3,460 call options at the December $17.5 strike, versus previously existing open interest of just 980 contracts. It looks like more than 3,000 of the calls were purchased for a premium of $0.35 per contract. Plain-vanilla call buyers are prepared to make money should shares increase another 3.00% to exceed the effective breakeven point to the upside at $17.85 ahead of December expiration day. Rubbermaid’s shares last traded above $17.85 as recently as November 5, 2010.

GRS - Gammon Gold, Inc. – Bullish players picked up call options on the gold mining company today with shares of the Halifax, Nova Scotia-based firm climbing 1.2% to $6.77 in the final hour of the session. Investors expecting Gammon’s shares to extend gains purchased more than 3,000 calls at the January 2011 $7.0 strike for a premium of $0.43 apiece. Call buyers at this strike are poised to profit should shares in Gammon Gold surge 9.75% over the current price of $6.77 to surpass the effective breakeven point at $7.43 by January expiration. More than 3,280 calls changed hands at the Jan. 2011 $7.0 strike, which is more than six times the number of contracts represented by the 531 lots of previously existing open interest at that strike. Bullish sentiment spread to the March 2011 $7.5 strike where another 1,000 call options were purchased for premium of $0.48 each.…
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Phil's Favorites

The existential case for ditching Alexa and other AI


The existential case for ditching Alexa and other AI

Robert Couse-Baker/Flickr, CC BY-SA

Courtesy of Brendan Canavan, University of Huddersfield

Alexa’s creepy laugh is far from the most worrying thing about her. This is despite the fact that Amazon’s digital assistant – which allows users to access the internet and control personal organisation tools simply by speaking to the device – has been reported to spontaneously chuckle to herself. We shouldn’t be too concerned about he...

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Zero Hedge

Trader Shares "A Few Ideas For Avoiding A Friday Faceplant"

Courtesy of ZeroHedge. View original post here.

From Bloomberg macro commentator, Richard Breslow

Don’t mistake this as a trade recommendation, but it is all right to do nothing. Trading when you believe you have an edge is when it is time to step in. If you are there, then go for it. But trading merely because things are moving around is a day-trading concept, not an investment thesis.

It’s important to match trading style, objectives and realistic liquidity assumptions to how you view volatility vs risk. They are very much not the same thing. Made even more so if you think the Fed equity put has been eliminated. It hasn&#...

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Insider Scoop

41 Biggest Movers From Yesterday

Courtesy of Benzinga.

  • Odyssey Marine Exploration, Inc. (NASDAQ: OMEX) shares climbed 118.42 percent to close at $8.30 on Thursday after the company disclosed positive Mexico Court Decision nullifying a previous denial of application for Don Diego project.
  • Omeros Corporation (NASDAQ: OMER) shares gained 35.31 percent to close at $15.75. The maker of a cataract surgery drug called Omidria realized a "big win" from Wednesday's release of the U.S. government spending bill, according to Stat News. Specifically, a policy included in the spending bill includes a pass-through exte... more from Insider

Chart School

Bitcoin Cycles Review

Courtesy of Read the Ticker. uses Bartel's logic to find dominant cycles in a time series.

Cycles are present in markets, as shown below the 22 and 40 day cycles on calendar days looks like the best fit. Therefore the chart below suggest we can expect a bitcoin low either now or in a few weeks.

Bitcoin has not been effected by the SP500/Dow sell off which is a very bullish sign, bitcoin may see safe haven money chasing price very soon, add to this the sister coin, litecoin, isgetting ready for wider use with the massive e-commerce payment market (litepay, litepal, atomic swamps, lightening network).

The bitcoin move is not over!


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U.S. Commerce Secretary Wilbur Ross Speaks With CNBC's "Power Lunch" Today

By VW Staff. Originally published at ValueWalk.

WHEN: Today, Thursday, March 22, 2018

WHERE: CNBC’s “Power Lunch”

Following is the unofficial transcript of a FIRST ON CNBC interview with U.S. Commerce Secretary Wilbur Ross on CNBC’s “Power Lunch” (M-F 1PM – 3PM) today, Thursday, March 22nd. Following are links to video from the interview on

]]> Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.


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Digital Currencies

Why accountants of the future will need to speak blockchain and cryptocurrency if they want your money


Why accountants of the future will need to speak blockchain and cryptocurrency if they want your money


Courtesy of Anwar Halari, The Open University

If you haven’t already heard of Bitcoin, you either haven’t been paying attention or you’re a time traveller who just touched down in 2018. Because by now, most of us will have heard of Bitcoin and some of us have even jumped on the bandwagon, investing in cryptocurrencies.

But despite its popularity, many people still don’t understand the technology that underlines it: blockchain. In...

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Members' Corner

Cambridge Analytica and the 2016 Election: What you need to know (updated)


"If you want to fundamentally reshape society, you first have to break it." ~ Christopher Wylie

[Interview: Cambridge Analytica whistleblower: 'We spent $1m harvesting millions of Facebook profiles' – video]

"You’ve probably heard by now that Cambridge Analytica, which is backed by the borderline-psychotic Mercer family and was formerly chaired by Steve Bannon, had a decisive role in manipulating voters on a one-by-one basis – using their own personal data to push them toward voting ...

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How your brain is wired to just say 'yes' to opioids

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.


How your brain is wired to just say ‘yes’ to opioids

A Philadelphia man, who struggles with opioid addiction, in 2017. AP Photo/Matt Rourke

Courtesy of Paul R. Sanberg, University of South Florida and Samantha Portis, University of South Florida


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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...

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Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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NewsWare: Watch Today's Webinar!


We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.


EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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