[update below]

I have begun reading Adam Warner's new book Options Volatility Trading: Strategies for Profiting from Market Swings. For those of you who don't know, Adam writes the excellent and influential blog Daily Options Report. I started reading Adam's writing when he co-wrote the options column on Street Insight (part of the TheStreet.com family) from spring 2003 to spring 2005. He is currently Options Editor at Minyanville.com. You can read his profile at his About on his blog.

On 4 October 2009, The Wall Street Journal ran an article World Need for Oil Expected to Ease (subscription might be required), where the author, Spencer Swartz, wrote:

The International Energy Agency next week will make a "substantial" downward revision to its long-term forecast for global oil demand, a person familiar with the matter said, marking the second year running the group has slashed its view of the world's thirst for oil.

This post is just a quick update on three positions that I have discussed in the past—namely, Exxon Mobil Corporation (XOM), Pan American Silver Corp. (PAAS), and Blue Nile, Inc. (NILE).

Back in mid-August, I provided an update on my ExxonMobil position. My positions remain the same. Until this past week, I was doing extremely well. On Thursday, ExxonMobil released its earnings and slightly disappointed the street, and the stock dropped modestly—largely in sympathy with the overall markets. I have yet to read Seeking Alpha's XOM transcript, but will do so before the end of this weekend. My quick take is that I will likely continue to hold XOM into year-end.

Monday I went long Exxon Mobil Corporation (XOM). I indicated in a prior article, I had no position. Since that article, I have traded Exxon Mobil long and short.

Exxon has performed poorly this year. On 2 January 2009, the stock was at 81.64, and Monday it closed at $66.55, down about 18.5%. Oil prices are about $67.22, which is a reasonable and healthy oil price for most integrated oil companies to perform well.

I will discuss the Pan American Silver Corp. (PAAS) second quarter conference call held on 12 August 2009 by providing the conference call's major themes in point form. In listening to the conference call, I did not place heavy emphasis on detailed financial information. For example, I am not too fussed about such items as noncash foreign exchange losses. Instead, I listened to how the company performed over the last quarter and expected to perform for the duration of the year. For example, I am focused on the company's silver cash cost. Because I believe the company is well managed by seasoned and competent professionals and because of my concern with potential inflation, Pan American Silver remains one of my core holdings.

In addition to transcripts of the company's conference call (see Seeking Alpha for the transcript and company's website transcript (PDF, 76 kb)), I used the company's press release (PDF, 47 kb). The press release is well worth reading for a quick snapshot.

As preparation for my review of first quarter 2009 results of Blue Nile, Inc. (NILE), you might wish to read Blue Nile First Quarter 2009 Financial Results, my synopsis of the Blue Nile's fourth quarter 2008 results, and Eric Savitz's article at Seeking Alpha.

Prior to the release of the fourth quarter results, analysts had the following expectations:

I will discuss the Pan American Silver Corp. (PAAS) fourth quarter conference call held on 19 February 2009. More specifically, I will provide a short summary of the conference call's major themes and then discuss the company's individual mines, all in point form. And I will wrap up by discussing the company's outlook.

In addition to transcripts of the company's conference call (see Seeking Alpha's transcript and the company's website for its transcript (PDF, 72.1 kb)), I used the company's press release and financial statements (PDF, 2.3 mb). Pan American's information, though somewhat chaotic, is worthwhile reading.

Friends and acquaintances have been mentioning how they have been using levered exchange traded funds (ETFs) in the stock market. Some use these ETFs for the overall general market, financials, or commodities. Regardless of the actual ETFs, they all behave in similar manner. Whenever someone mentions using a leveraged ETF, I always ask, "Are you using this ETF for intraday movements or holding this ETF for several days, possibly months?" Invariably, the person responds that he has an outlook and wants to capture an outsized return by holding for many days, possibly months. For example, an acquaintance at the gym mentioned that he is bullish on oil longer term and was using an ETF with double leverage. I advised him to sell. Why did I do that?

While I share his positive longer term outlook for oil, I advised him to get out of his levered oil ETF because of his exposure to volatility over a longer term. A good way to understand this material is to look at a hypothetical example.

Please note that you can click through the charts and diagrams to see larger versions.

After the Blue Nile, Inc. (NILE) conference call this past Wednesday (Seeking Alpha Transcript), I am following up to my prior article where I stated that:

In preparation for the Blue Nile, Inc. (NILE) conference call, which is scheduled for Wednesday, 18 February 2009 at 5 pm ET, I will provide my thoughts.

We are all familiar with the ongoing recession. It seems that every day more bad economic news hits the headlines. Of course, jewelry has been hit especially hard as it is often considered a discretionary and luxury item. A few days ago, The Wall Street Journal ran an interesting article No Sparkle for Jewelers on Feb. 14: Recession Pummels Chain Stores as More Buyers Turn Their Back on Bling (subscription required).

We have enjoyed two strong days in the stock market. On a pullback, one strategy you might wish to consider is to short puts on a stock that you like and do not own. This is called a naked put or uncovered put position.

Why short puts?

Blue Nile, Inc. (NILE) held its third quarter 2008 conference call last week. I listened to the call and read the transcript at Seeking Alpha. We could dig into the facts and figures, but the reality is, I do not think the highly granular information matters right now.

The psyche of the consumer has been badly damaged, with October posting the lowest consumer confidence level on record. While our third quarter sales declined by 2.9% overall, published reports indicate that total Internet jewelry sales declined 11% year on year in the quarter. At Blue Nile we have seen our sales weaken in the past seven weeks, following the unprecedented events in the financial markets beginning in mid-September.

The Wall Street Journal article GM's Shares Tumble on Rising Cash Concerns (subscription required) is one of several in the financial press that discusses the likely demise of a once great and proud company, General Motors Corporation (GM).

General Motors Corp. stock fell to its lowest level since 1946 as concern intensified that the auto maker could run out of cash and be forced to file for bankruptcy protection.

Note: You can click through on any of the graphs to see a larger image.

The above graph shows West Texas Intermediate (WTI) oil prices for about the last four years.

Wowsers! What else can you say about this amazing past week?

I am sure you have all read about Freddie Mac (FRE), Fannie Mae (FNM), Lehman Brothers Inc. (LEH), Merrill Lynch & Co., Inc. (MER), American International Group, Inc. (AIG), wacko rules against short selling certain financial stocks, $700 billion bailout package, and probably several other newsworthy events that I have missed. I wish I had something meaningful or insightful to add to the recent developments.

You can click on Bloomberg Marketdata Commodities to see the latest results.

The selloff in commodities since early July is simply stunning. The same can be said for the current sell off and turbulence in the broader markets.

Barron's Magazine has a great interview (subscription required) with Charles Maxwell, Senior Energy Analyst, Weeden & Co.

How high do you think the price of oil will go from here?

Natalie Obiko Pearson wrote an excellent article, IEA Sees World Oil Market Tightening, for the online Wall Street Journal (subscription required).

Saturday, I provided some thoughts with regard to the Saudi Oil Conference. Robert F. Worth and Jad Mouawad wrote an excellent article At Oil Conference, Saudis Offer Slight Rise in Production (free registration is required) for The New York Times. I will just offer a teaser quote and encourage you to read the article in full.