Friday, February 25, 2011

Focus on OIL this week: Recap

This is a follow up post of the article I posted on Monday this week, if you haven't read it yet just scroll down or click the link. (Focus on OIL this week).
In it I gave the ETN a buy recommendation and for those of you who have done so have pretty nice results at the moment. In fact I recommend you to hold on to it even a few more weeks because the price of oil is heading to over $100 a barrel and stay there for awhile, I'll elaborate on this further in the end of the post. Let's now take a look at the updated chart I posted on Monday today;

The intra week chart for this commodity tracker looks like this;

The trade recommendation was given at $23.89, now at $26.20 for the week, that's a nice profit! A simple aggressive out-of-the-money $24 call option (the one I recommended and took myself)  amplifies the trading profits even more. One more reason to follow VDM Trading :)
What I mean to say by this is that most articles I post on this blog are 'high probability' trades. If they are I will state they are, and one more reason to keep your eyes open on the trade given. I admit, I'm not always right, but when I'm not, I narrow my losses and but when I'm right I extent my profits. And that's what trading should be, consistent profitable trades. You can't be always right, but when you are make sure you get the most out of it.
I got to say, this was a relatively easy one. 
Middle-east in the traders mind is automatically linked to oil, and when unrest brakes out the price (market price) of oil tends to spike by speculators. The actual price of oil (the intrinsic value) stays pretty much the same. But that's not what the boards reflect. The trading boards reflect speculating sadly enough, I say sadly because a lot of people will suffer from rising prices at the pump. 
Even though it's a known fact that Libya produces only 2% of the worlds oil supply and most of it is going to Europe, it still seems to have a huge impact on the US economy. Higher oil prices automatically domino effects to higher gas prices at the pump here in the US which then results in a drag on the US economy as a whole since every dollar Americans spend at the pump can't be spend elsewhere. It's all one big mess, but in my opinion a very predictable mess, a reason why this trade came up. 
Sometimes all it takes is to watch the news and a little common sense to come up with extremely high profitable trades.
Like always, if I see other potential trade developments emerging, this blog is the first one to know it!



Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.