Philip Davis

Options Trader: Friday Outlook

Oh here you go, it took me all of 20 seconds to Google the latest news on OPEC supply. "OPEC oil supply in May is expected to rise by 700,000 barrels per day (bpd), led by higher output from members including Nigeria and Saudi Arabia, an industry consultant said on Wednesday." Gee, that's not a 5% reduction from Nigeria...


www.guardian.co.uk/bus...

"Nigerian supply is likely to rise by about 200,000 bpd to 2.05 million bpd" Let's see 1.85 M must have been last month so take 200,000 and divide by 1.85M and that looks like a 10.8% INCREASE in production. Must be my calculator that's off righ?

"Iran, which has been storing unsold crude at sea on oil tankers, is expected to produce about 100,000 bpd more in May, bringing supply to the market to 3.65 million bpd."

"They are still putting a lot into storage. The heavier grades are not selling well," Gerber said."


I don't have production numbers on Venezuela but their Oil Minister just announced their reserves are up 30%, must be those pesky environmentalists that are stopping them from pumping 10 ANWARs worth of oil that they've recently added...

www.economicnews.ca/ce...

Options Trader: Friday Outlook

Now, you see, that is exactly the kind of baseless and totally false information I'm talking about!

Here is the EIAs April 2008 Monthly report which clearly shows that the global oil supply was 84.64Mbd in 2005, 84.60 in 2006 and 84.59 in 2007 - flat as a pancake.

www.eia.doe.gov/emeu/i...

While they also do show an increase in demand from 84.62Mbd in 2006 to 85.35Mbd in 2007, the fact of the matter is that global inventories were 3,586Bn barrels in Q1 '07 and are at 3,534 in Q1 '08, a 52M barrel draw over 12 months, NOT 30 days!

www.eia.doe.gov/emeu/s...

The projection for Q2 is for a build of 63Mb to 3,597 IN ONE QUARTER because demand is falling off a cliff and this increased supply is projected to hold steady through 2009.

In short, there is no shortage of supply, simply a growing shortage of demand. Mexico's production in Q4 was 3.35Mbd and in Q1 was 3.30, hardly 5%. Other countries are not broken down in the report but I'd love to see the list you are working from that contradicts the IEA by such a massive amount.

I urge anyone reading these discussions to seek out the facts for yourself, do not believe what you are being spoon-fed, either by the media or by anonymous posters who throw "facts" out without bothering to cite sources.

Options Trader: Friday Outlook

User 198 - These are just exerpts that SA takes from my membership site. All those details are discussed in the member section and the web site is linked at the top of the page. Those were day trades from the day before, we had long Apple calls that we UNcovered on the dip on Thursday and held naked overnight. BIDU was a call we picked up on yesterday's close that we escaped even this morning.

Well Al, on Wednesday our screens told us to go short on XOM, CVX, SU, USO and HES as oil topped $133 and today we cashed most of them out to give you a chance to buy them back up "on the dip." If it weren't for people like you and Ship Shape, we'd have no one to buy puts from so I'm not even going to try to change your mind. In fact, we even grabbed XOM $95 calls at the close so please, go to town on Monday, we'll be shorting again when you get to around Wednesday's close - have a great weekend!

November Market Analysis - What a Month!

Try googling "the cramer effect," there's a lot written on it and a few weeks ago I actually found a college statistics paper studying his effect on stocks (not favorable, it backed up my trap premise).

Whether he does it on purpose or if he is just irresponsible, clearly his guiding sheep to the slaughter on momentum stocks that are 2/3 or more up a cycle is very damaging to the casual investor following his picks. When I do a show, I have already decided that I will call bottoms on stocks (like SBUX, WM and CC recently) and tell people how to pick them up as good long-term investments.

I don't need to post spectacular gains on a TV show as the investing style is inappropriate for 90% of the audience, I'd rather have a show where, a year later, the picks average 18% and you didn't have to be a timing genius to get in on the trade.

Even on my member site we have long and short-term portfolios as not everyone wants to be a gunslinger and getting reasonable returns from fairly safe plays is very appealing to the majority.

Scoring A Windfall From Baidu Puts

The calls were a spread so we didn't really care what they did. It's hard to tell the way that sheet comes out but you can see one is negative and one is positive, we're just waiting for premiums to expire on the Novembers on that play that started as a $3 spread when the stock was A LOT cheaper.

The Jan/Are covered with the Oct $330 puts so the only "naked" position we have is the $310 puts, which we decided to let ride over the weekend in case China bursts into flames.