alwaysdrawing

USO still at a 16% premium to NAV, but the only thing that matters is the underlying. Watch the June contract...as that declines it could force USO into liquidation.

I calculate NAV of USO to be 2.42, which means the premium to NAV is around 19% I think it's likely we could see liquidation this week. Buying some shorter term OOTM options. Futures traders may press. Watch for June to continue to fall Buying a lot more Friday $1s June under $12.....holy shit USO NAV is 2.25.....I think they could hit 0 I actually think it's technically possible for USO to go negative if the June contract goes negative. This might be the craziest trade of my life.... USO is halted.

I calculate NAV of USO to be 2.42, which means the premium to NAV is around 19% I think it's likely we could see liquidation this week. Buying some shorter term OOTM options. Futures traders may press. Watch for June to continue to fall Buying a lot more Friday $1s June under $12.....holy shit USO NAV is 2.25.....I think they could hit 0 I actually think it's technically possible for USO to go negative if the June contract goes negative. This might be the craziest trade of my life....

I calculate NAV of USO to be 2.42, which means the premium to NAV is around 19% I think it's likely we could see liquidation this week. Buying some shorter term OOTM options. Futures traders may press. Watch for June to continue to fall Buying a lot more Friday $1s June under $12.....holy shit USO NAV is 2.25.....I think they could hit 0 I actually think it's technically possible for USO to go negative if the June contract goes negative.

I calculate NAV of USO to be 2.42, which means the premium to NAV is around 19% I think it's likely we could see liquidation this week. Buying some shorter term OOTM options. Futures traders may press. Watch for June to continue to fall Buying a lot more Friday $1s June under $12.....holy shit USO NAV is 2.25.....I think they could hit 0

I calculate NAV of USO to be 2.42, which means the premium to NAV is around 19% I think it's likely we could see liquidation this week. Buying some shorter term OOTM options. Futures traders may press. Watch for June to continue to fall Buying a lot more Friday $1s

I calculate NAV of USO to be 2.42, which means the premium to NAV is around 19% I think it's likely we could see liquidation this week. Buying some shorter term OOTM options. Futures traders may press. Watch for June to continue to fall

I calculate NAV of USO to be 2.42, which means the premium to NAV is around 19%

June continues to fall, I am buying more USO puts. I think this could implode today if June goes down to the margin req.

So, the June contract just down 30% today. LOL....this market is wild

Article in FT today saying USO is taking (I believe) 20% of its fund and buying longer out futures contracts. Does that change your conviction always drawing? That was true as of a couple weeks ago, but the fund will continue to waste in contango. It is unlikely to go to 0 because of the 20% in the second month, but it will lose a lot of value if spot drops big before the roll. I think the pros will front run USO this go around, as USO has become a large % of the futures market. The halt this morning was because they are suspending share creation, which makes sense as people pour money into the ETF they are indiscriminately buying a huge percentage of the futures market. I don't have a large position, but I bought 75 July $2 USO puts for between 0.20 and 0.28 yesterday, and the current price is 0.50. It's such a small position I'm inclined to let it ride, as I think the oil market is still profoundly oversupplied, and contango will persist. I think the "safe" way to play that thesis is the tanker trade, which I have a much more significant position in.

This may be a really dumb question but if someone out there has a liquidity problem, how can they pay someone else to take the contract off them? I can understand how a liquidity crunch would drive a firesale at a low positive price. I can't understand how it would drive a negative price. Surely if you're f***ed for cash and the price goes negative you just go bust and stop worrying about the fact that you can't accept delivery? This is a real market for physical delivery, so if you own the contract you MUST take delivery or you are bankrupt, and your broker will have to handle it for you. Oil is not like steel or copper or something else you can just take delivery of and drop off at a yard somewhere. You can't dump it out on land or the ocean, you need to pay someone for storage, and that's what drives the negative prices, as those storage costs are non-trivial, and during a shortage like the present, there is simply nowhere to put the oil that must be delivered.

Are there any other etfs that is doing what USO is doing? I started to put a order on USO 30 seconds before the close yesterday but I didn't get it in before close. Do you want to buy or short? USO is going to get crushed by the contango. It is not a good ETF to speculate on the price of oil.

https://www.robintrack.net/

Robinhood shows USO, an ETF that holds oil futures contracts, was the biggest add today. Retail investors don't know WTF they are buying, and are going to crash into contango. I wouldn't be surprised if USO collapses in the next 30 days. I see absolutely no reason why the June futures won't collapse like May causing massive losses for USO holders. I bought a very small position in USO July $2 puts. It's actually a similar situation to XIV during volmageddon, and would be 8-10 bags if the ETF liquidates at 0. I don't think it would get to 0, but as seen today the market could get pretty crazy as people realize there is absolutely no storage for physical oil.

This is big, but not quite what you say. Futures further out (June and July, I think) were still in the 20s last I saw. This is a storage issue for this month's contract because we're close to date when you have to get delivery. https://www.forbes.com/sites/jimcollins/2020/04/20/the-us-oil-etf-uso-is-the-culprit-behind-oils-massive-plunge/?subId3=xid:fr1587412446979iif#141008c724e8 It matters, but Liberty is right. This is small potatoes--most oil futures for May were already closed. This just screws some people with open long contracts who cannot take physical delivery. That said, I don't see why this doesn't happen again when June expires...nothing about the massive oversupply has been fixed, and storage continues to fill.

If you have storage, write the check out yourself.

Sorry -$40/barrel

Oil is only down 140% today to -$8/barrel.

Buffett/Munger have a ton of insight into the real economy with the data they see daily from their subsidiaries. Buffett is close friends with Bill Gates--you know, the guy who resigned from Berkshire's board to work on COVID response. Buffett/Munger have tough days ahead, as they have tons of businesses hard hit: Railroads Airplane parts manufacturers Car dealers Net Jets Furniture stores Mobile home makers Retail candy stores Stocks in airlines, banks, and Apple, among others The only bright spots are insurance like GEICO, which is likely minting money, and the utilities, which are probably not hurt too badly. Overall though, I think Berkshire is going to have a lot of rough segments and I wouldn't be surprised if there are layoffs across many divisions of the company. Uncle Warren came rushing in to buy in 2008 because nothing was fundamentally broken about most of the economy. Right now, I don't think that's the case, and one reason I don't think you've seen Buffett buying (in fact, he's been selling at least airlines, which require regulatory disclosure).

why not TNK? No special reason. Fits with the trade.

Buying a basket of tankers (Crude & products): ADS NO DHT DSSI EURN INSW NNA STNG TNP Supercontango looks like a sure thing, now that everyone is waking up and realizing that the OPEC cuts were a farce and much less than the drop in global oil demand. Oil down, VLCC rates up, and I expect both to continue along those paths.

Is this your first time buying puts on dead companies? I've done so in the past, hilariously usually breaking even. I've had companies technically in BK with 100s of millions in equity value, buying 6 month puts and having them breakeven. It can be infuriating. Not by a long shot. I made money in the early stages of MDXG’s collapse, and ended up losing a bit more than my early gains when the company did not go bankrupt by Jan 2020, despite not filing financials. I have also lost money on options on Tesla over the past few years (though have won at various points along the way too). Options are generally a small part of my portfolio, but in the past two months I’ve been very successful buying puts on companies with a clear downside to COVID impacts, companies with weak balance sheets/high leverage, and buying calls on volatility. At this point I have significant put positions that are longer duration, and which I still think will perform asymmetrically. I have a background in poker, sports betting, and various other games, and options are a natural extension of other gambling/strategy type games. Finding asymmetry is difficult, and sometimes the thesis doesn’t pan out, but when you buy OOTM options, it’s OK if they often go to 0 if sometimes you make 5x or 10x or, like with some of the recent volatility calls, 20-40x. I only buy long puts and calls in an anti-fragile way where all I can lose is the option cost. That being said, how often can you easily buy options on a company with literal 0 current revenue, no insight into when they will reopen, and priced based on stale numbers? It defies basic logic, and must be because market makers are using Black Scholes (and likely think they are scalping me), when they really risk significant gaps down that are foreseeable. I have never seen anything like this market, and opportunities abound in asymmetric bets still.

Neat idea and hardly(to my knowledge) a crowded institutional idea either. How do look at structuring this in a cost effective manner? I gave it a quick glance and put it on the "take a look at" reminder list for later. But briefly, couldn't you construct a cheaper expression with an outright short and some calls to hedge? Or is this a "big expected downside so go really far out of the money" situation? I just buy long out of the money puts. Very interesting - what dates you buying on the puts? Mostly I buy longer dated stuff--Jan 2021. I have some shorter dates on this name too, but mostly I'm in Jan 2021 $100s/$120s The spreads on those puts is something to behold. Bid and ask are 2x apart (order of magnitude). Try to get a fill in between--if you have a good broker like Fidelity or IBKR they help too. Or just pay the ask--most of these options are hung based on market makers running delta hedge books, not by a bookie setting the line. I honestly think these options, among others right now, is stealing--buying insurance on a house that's already engulfed in flames.

Neat idea and hardly(to my knowledge) a crowded institutional idea either. How do look at structuring this in a cost effective manner? I gave it a quick glance and put it on the "take a look at" reminder list for later. But briefly, couldn't you construct a cheaper expression with an outright short and some calls to hedge? Or is this a "big expected downside so go really far out of the money" situation? I just buy long out of the money puts. Very interesting - what dates you buying on the puts? Mostly I buy longer dated stuff--Jan 2021. I have some shorter dates on this name too, but mostly I'm in Jan 2021 $100s/$120s