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starbucks4ever (80.11)

Second oil short



September 17, 2010 – Comments (2)

XLE @54.34 

Put the proceeds in DIA @105.88.

As always, the short is protected with a call option. 





2 Comments – Post Your Own

#1) On September 17, 2010 at 6:59 PM, rd80 (94.69) wrote:

This one's a little confusing.  Dow stocks XOM and CVX are the biggest holdings of XLE.  Seems like you're fighting yourself with a chunk of the pair trade.

Glad to see you're using protection and practicing safe shorting.

Disclosure - long CVX

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#2) On September 17, 2010 at 7:21 PM, starbucks4ever (80.11) wrote:

Yes, 10% of DIA is oil. If it were a pure anti-oil bet, my hedge should have been a little stronger. 

It is hard to find a good ETF that's entirely stripped of petroleum while still being a good proxy for the overall market. DIA is as good a choice as you are likely to find, and apart from the 2 ugly losers, all the rest are excellent choices. 

As a side note, CVX is probably the best of the breed. If I had to bet on the survival of one oil company, I would bet on CVX.   

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