starbucks4ever (97.42)

starbucks4ever's CAPS Blog

Second oil short

Recs

5

Report

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 (98.45) 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

Report this comment

#2) On September 17, 2010 at 7:21 PM, starbucks4ever (97.42) 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.

Report this comment