Oil has been moving higher in recent days, but I do not think it’ll last. There’s still too much supply on the market, as compared to demand… and bulls forget this.
Even though rigs are being shut down, it’s not changing the amount of excess supply. We also have to remember that OPEC is not likely to do anything. The bulls can buy energy companies if they want, but we’ve seen similar bullish arguments for upside at least three times in the past.
Citibank believes oil could fall to $20.
Goldman Sachs downgraded targets to $40.
Yet the bulls are out buying it. There’s no bottom. And there are three ways to profit from that reality.
I just ask that you not risk the house on these trade ideas. We have to be safe and cautious in such a volatile market.
But here’s what I recommend.
• Consider buying to open American Airlines (AAL) May 2015 50 call up to $3.85…
• Consider buying Transocean (RIG) May 2015 18 put up to $2.65…
• Consider buying Exxon Mobil (XOM) April 2015 90 put up to $2.90…
Good Investing,
Ian L. Cooper
Inside Value Trader