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股市縱橫學習日記
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Price
(1) The Highest $150 10 Year Low $20, Recent Low $50 in 2007. current $60
(2) Floor would be $30 given the current market condition. Below $30, Canadian Oil Sands will start to lose money and curb the output.
(3) With the strength of the current crash, most recent low of $50 has to be tested. A strong rally is possible at this point.
(4) Given the scenario $50 is hit and 25% discount from here due to margin requirement, the ultimate price may hit $37.5.
(5) So $30-40 will be the ultimate bottom price range for crude oil.
(6) The USO will be 31.5 for crude @ 37.5 then. and the bottom range for USO will be $25-35, basically around $30
Strategy:
(1) Sell cash secured naked put with expectation of buy USO when the bottom price is in range ($35). With reasonable strike price (lower than the currently price 5-10% lower) and reasonable premium (5-10%), this makes the inital highest possible entry price to be $30, a very safe price.
(2) Sell every month until it's assigned and exercised. This is make the purchase price at least 10-20% lower than direct buy. If I'm so lucky that it's only assigned 3 months later, this is 30% discount already, making the bet very safe.
(3) Once assigned, start to sell covered call. with 5-10% higher than current price and a reasonable premium(5-10%).
(4) Start gradually with 2-3 steps to gather all the positions. 1 contract represents 2 years usage of a car. After the first entry is assigned, start with the 2nd entry by selling naked puts.
(5) All premiums collected will be reinvested with the same strategy.
(6) Strike price rule: Premium at least 5%, Strike at least 5% below (put) or above (call) the current price. And when the market is weaker, adjust Strike price a little bit lower (call&put). If the market is strong, pick a slightly higher strike price.
Loss Analysis:
Max first entry cost: $28 ( 35 - 3 - 2 - 2) $32 Strike price with $2 premium, sell covered call @34 with $2 premium.
2nd step, when price hits $32, sell naked put with strike price @30 and get $2 premium. If assigned next month and after selling covered call with $2 premium, ths cost is $26 (30-2-2).
the final step with the max possible cost $24.
Average max cost is $26, a fairly safe price for USO. And it should be reduced to $15 after a year.
(1) The Highest $150 10 Year Low $20, Recent Low $50 in 2007. current $60
(2) Floor would be $30 given the current market condition. Below $30, Canadian Oil Sands will start to lose money and curb the output.
(3) With the strength of the current crash, most recent low of $50 has to be tested. A strong rally is possible at this point.
(4) Given the scenario $50 is hit and 25% discount from here due to margin requirement, the ultimate price may hit $37.5.
(5) So $30-40 will be the ultimate bottom price range for crude oil.
(6) The USO will be 31.5 for crude @ 37.5 then. and the bottom range for USO will be $25-35, basically around $30
Strategy:
(1) Sell cash secured naked put with expectation of buy USO when the bottom price is in range ($35). With reasonable strike price (lower than the currently price 5-10% lower) and reasonable premium (5-10%), this makes the inital highest possible entry price to be $30, a very safe price.
(2) Sell every month until it's assigned and exercised. This is make the purchase price at least 10-20% lower than direct buy. If I'm so lucky that it's only assigned 3 months later, this is 30% discount already, making the bet very safe.
(3) Once assigned, start to sell covered call. with 5-10% higher than current price and a reasonable premium(5-10%).
(4) Start gradually with 2-3 steps to gather all the positions. 1 contract represents 2 years usage of a car. After the first entry is assigned, start with the 2nd entry by selling naked puts.
(5) All premiums collected will be reinvested with the same strategy.
(6) Strike price rule: Premium at least 5%, Strike at least 5% below (put) or above (call) the current price. And when the market is weaker, adjust Strike price a little bit lower (call&put). If the market is strong, pick a slightly higher strike price.
Loss Analysis:
Max first entry cost: $28 ( 35 - 3 - 2 - 2) $32 Strike price with $2 premium, sell covered call @34 with $2 premium.
2nd step, when price hits $32, sell naked put with strike price @30 and get $2 premium. If assigned next month and after selling covered call with $2 premium, ths cost is $26 (30-2-2).
the final step with the max possible cost $24.
Average max cost is $26, a fairly safe price for USO. And it should be reduced to $15 after a year.
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