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Even as oil moves to a 9-month high, volatility on the oil-stock index (XLE) has collapsed,...

Even as oil moves to a 9-month high, volatility on the oil-stock index (XLE) has collapsed, writes Steven Sears, making the purchase of XLE calls a leveraged way to play a further breakout in crude without forking over a ton of premium.
Comments (16)
  • untrusting investor
    , contributor
    Comments (9928) | Send Message
     
    Not surprised at all. Given massive central bank interventions, including LTRO coming up at end of Feb/12 for EU, it is surprising that oil is not even higher yet. But it will be. The world central banks are "screwing" consumers worldwide with more to come. Way to go Uncle Ben, you can take the consumer to the cleaners, but the oil and resource producers will continue to stay ahead of you.
    23 Feb 2012, 07:08 PM Reply Like
  • srspa77
    , contributor
    Comments (326) | Send Message
     
    Have you seen the charts on Euro oil? It was in the low 90's just a few months ago. Now it's at $124. There is no way they can sustain it going much higher w/o another collapse. At least the boys over at CNBC are saying we are "separating" from Europe. Phew..I feel better now. I hate to see this happening again. We are getting screwed!
    23 Feb 2012, 07:17 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3717) | Send Message
     
    This is something completely irrational and is just based on speculation gone wild as usual. Any excuse to make a buck off global tensions that really don't have anything to do with us. Why would WTI be at $100 bl? We don't even import any oil from Iran and Libya only supplied 2%, and affects supply minimally. So how can you really explain it?
    23 Feb 2012, 09:50 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9928) | Send Message
     
    The oil boyz are well on their way to handing the Fed, ECB and central bank serial money printers their butts on a platter. So Banana Ben and Super Mario think they can print trillions and trillions of easy money to bail out the fraudulent banksters and bondholders. Think again as the real asset producers such as the oil boyz will soon be showing them who really holds the trump cards.
    23 Feb 2012, 10:36 PM Reply Like
  • bob adamson
    , contributor
    Comments (4557) | Send Message
     
    Given the tepid state of the economy in Europe and Asia (which discounts the possibility of demand-pull inflation as a cause), a good $8-18 of these prices are (by default) directly attributable to fears of escalation in the confrontation of Iran with its neighbours. A lesser but significant factor is the recovery of the exchange rate of the Euro in terms of the USD in light of the recent reduction in the prospect of Greek sovereign debt default in the near term (i.e as oil trading is denominated in USDs, the price of a barrel of oil will appreciate as other major currencies appreciate relative to the USD.

     

    While these higher oil prices (if the last more than a month or so) both increases inflationary pressures and slows economic recovery, it is putting the proverbial cart before the horse to assume the recent oil price rises are evidence of inflationary pressures caused by monetary easing in the US, the UK, and the EU..
    23 Feb 2012, 10:43 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3717) | Send Message
     
    Oil doesn't have any margin costs associated with using margin to buy it. So you can buy all the oil you want without much risk, so speculators are stepping in, just as in 2008 and screwing the rest of us.
    23 Feb 2012, 10:47 PM Reply Like
  • srspa77
    , contributor
    Comments (326) | Send Message
     
    When will it end? Anyone have any guesses? $120 WTI? $130 WTI? $140 WTI??? Last year we topped out at $114 in April.
    23 Feb 2012, 11:07 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3717) | Send Message
     
    Since a conflict with Iran is a foregone conclusion, we can see it go through $150 easily at least at first, and then the next quarters earnings will be in the tank because of it, then the oil barons will say whoops we over reached and sell it off, and wash out the rest of those who chased it up.

     

    Then the new president will take over and start fixing what needs to be fixed.
    23 Feb 2012, 11:13 PM Reply Like
  • srspa77
    , contributor
    Comments (326) | Send Message
     
    Everything I've heard is that an Iranian conflict is being pushed back until after Nov. 2012.
    23 Feb 2012, 11:16 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3717) | Send Message
     
    Oh so you put that in your day planner? You have dinner reservations that day?
    23 Feb 2012, 11:18 PM Reply Like
  • srspa77
    , contributor
    Comments (326) | Send Message
     
    I don't even now what that means. I do know Bernank and the ECB are ruining the bond markets and are a central cause of this oil shock. Screw you all you SAVERS. Bernank gives you the one finger salute!
    23 Feb 2012, 11:22 PM Reply Like
  • srspa77
    , contributor
    Comments (326) | Send Message
     
    Oil is set to pop Europe wide open. http://reut.rs/zyJRB5
    24 Feb 2012, 09:15 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9928) | Send Message
     
    sr,
    Yes, rising oil prices could well be the catalyst that sets off yet another worldwide recession. If so equity and risk asset prices could take quite a tumble.
    25 Feb 2012, 10:40 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (3717) | Send Message
     
    This is starting to go irrantional again, just waiting a little longer before I dump everything this time. War with Iran, economic numbers not so hot, unemplyment may stay stagnant or creep up, oil too high, ect...this is a repeat of last year, none of last years problems have been resolved yet. Greece is still the dark horse. They have solved nothing yet.
    25 Feb 2012, 04:35 PM Reply Like
  • gibson 345
    , contributor
    Comments (2) | Send Message
     
    If stocks tumble, I will go bargin hunting! Good stocks with better yields. I have a buddy who sold all in 09,lost 48% of net worth.
    The market will go back up, in the meantime , ad shares, increase income.
    I will ad picture when i figure out how to do it. Computer challanged.

     

    1
    26 Feb 2012, 04:29 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9928) | Send Message
     
    Sounds like a plan. Only question is where are you going to get the money from if your already fully invested? Lots of people wanted to buy in Mar/09 as well .... but very very few had the money to do so. Even Warren Buffett with his massive cash flows didn't have oodles of money to buy at the Mar/09 lows.
    26 Feb 2012, 02:48 PM Reply Like
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