Let's Trade Options

so, without any notice, USO fund managers announce a significant change in the way they are running the show - changing holdings 100% in front month to 80% front month & 20% 2nd month. By moving out to 2nd month, they are looking to catch a bounce in the underlying.

I stopped adding to USO positions some time ago, instead am in OIL long calls, XLE call spreads, etc.... But I am in USO spreads out to Jan '21.

USO roll blues

https://seekingalpha.com/article/433...-right-vehicle

In the following:

AAL Jun19 15 CALL @ $0.825 average

CCL Oct15 25 CALL @ $0.80

Should be good for a little money....especially as we start opening up again....

In the following:

UAL May15 36 CALL @ $1.08

Should be a moneymaker there....

https://finance.yahoo.com/news/unite...211717010.html

....dilution

This is more like an IPO....they are doing it to raise capital, but the buyers are going to snap these up because they know that the airlines, no matter how bad things seem, will not be allowed to fail, as they are the lifeblood (well, more like the arteries to the lifeblood) of domestic and foreign business, not to mention they are needed just for personal happy travel, too. Can't go to Disneyworld on a week's vacation without a plane if you live in Oregon....or your friend's wedding in Hawaii...

maybe so, Money, we'll see. But...

Would you get on a plane to go on a multi-leg flight next week? Next month? Are they going to have "social distancing" on the planes? Like, taking the middle or every other seats out? And when you file out of the plane, everyone will be 6 feet apart? And can they make money with planes <70% full? If they raise airfares to cover for lower volume, will people pay the premiums?

Air traffic might pick up some soon but it will lead to a pesky plateau or even increase in virus infections. Iain't going to the airport or flying anywhere until the vaccines are widely available....

I think that we are going to find out in the future (via antibody testing) that MANY more people have had the virus than has been tested, thus reducing the overall severity model that we have been using. We will soon find out that this is really not as bad as people assumed it was because we will finally be comparing apples-to-apples. Heck, the CDC has directions now that say "in cases where a definite diagnosis can not be made but is suspected or likely, that death is marked as "probable" or "presumed" COVID-19 on the death certificate"!

Right now we have tested over 4.1 million people in the US and out of that 825K confirmed cases. But they are only giving tests to those that show symptoms or have knowingly been exposed, and over half the confirmed cases never showed any symptoms. Now 120K have been hospitalized and 45K have died (though many of those probably fall into that category of "probable" or "presumed" COVID-19). But if we find out what several studies have indicated, that up to 50+ times more people have SARS-CoV-2 infections that have been reported (and that doesn't account for those that have recovered), that changes the whole outlook on the disease. If that is confirmed with the antibody testing, that might mean that well over 45 million people are/have been infected, yet the number of hospitalizations and deaths don't change..... Right now, around 15% of the confirmed cases are hospitalized and the death rate is around 5%....but if it turns out these studies are right and around 45million people have been infected instead of 825K, the percent hospitalized drops to about 3/10th of 1% and the death rate goes to about 1/10th of 1%....HUGE difference in how you look at this virus then. If it is shown that is the case, I think general population, at least those younger than 50yo, will not fear it like it is feared now, but will subside more towards that of the flu.

Some people believe that keeping people from getting it (like shelter in place orders) is the way to go, but this isn't a radioactive cloud or bad weather or even a plague of locust....it won't go away, and as soon as people start moving about, it will be there, just like the flu is...or measles...or chicken pox....But if this has done nothing else, it should prompt people to get in better shape and build up their immune system. Maybe make some lifestyle changes, like smoking or weight for diabetes, or vaping or stuff like that. Because this probably won't be the last major outbreak we see in our lifetime.

But, to your question, I'm not investing with the purchase of UAL and AAL, just trading, so it isn't about how it will be handled in the future or even whether I think flying is safe, but simply about whether I think they will make me money. And I do....

Time will tell. The widespread serological testing is probably still several months away, at least. The health implications of contracting covid-19 (aside from Death) continue to come to light. Gnarly lasting effects on lungs, heart and other organs. Numbers will continue to tell the tale and will keep getting clearer over time. Maybe overall mortality among those infected will be <0.5%...but what % of the infected will suffer permanent loss of lung function? If risk of hospitalization is let's say 5% overall, will people be ok with those odds?

Other questions remain: can those who have been infected become re-infected? Will the virus continue to mutate and foil efforts to come up with effective treatments and vaccines?

Ultimately most people will overcome their fears and go back to work, get on planes, go to theaters, etc. People accept all kinds of dangers in life. Some behaviors will change after this, long term. All remains to be seen.

I had my heart set on AAL <$5. With the airlines burning thru $100's of millions of cash every week, I still wonder if maybe they might not be permanently harmed. If they are going to have to be bailed out with public money, why not nationalize them?

Well, good or bad, I'm in the following:

UAL May15 34 @ $0.855 average

I have a lot of these, so a small move will make good money....

https://www.yahoo.com/news/25-000-mi...122220495.html

Total number of infected is being vastly under-reported but the # of victims is being under-reported also.

Testing has not been available in most places but anecdotal accounts of # of total deaths (# of funerals. etc) being up dramatically in many places continue to be heard.

with OIL liquidated and USO doing a 8:1 rev split, I am out some money on these trades. Adjusted USO options long-dated and still in spreads (some long legs out to Jan '21) still could make some money, but I am consigning myself to loss on these....most trades were entered as spreads @ <20c debit - how I roll - so, not gonna hurt too much. Mostly I am just sad....

We just need to make sure that comparisons are apples-to-apples. I did a statistical paper on that once, and the mortality data is just that, people that died (for any reason) during the reporting period. If there are major disasters (floods, typhoons, ferry sinkings, etc.), that shows up too in the total numbers. They also don't take into account the average ages of population, so the US will show increase in numbers as us baby boomers start dropping off the vine in our 80's. So unless all of that stuff is weeded out and categorized for true comparison, it is hard to see exactly what is going on.

I still think a lot of New York's issue is with those public health officials telling everyone to go to Chinatown and enjoy the Chinese New Year to show that virus who's boss!....same with Italy with the Mayor of Florence telling everyone to go hug a Chinese person on the street. Trying to be politically correct rather than safety conscious cost a lot of lives, I'm sure.....

https://www.reuters.com/article/us-h...-idUSKBN21L2XU

things like this I've seen....from many different places....but if you have some knowledge of statistics you know how tricky it can be to get to any reliable conclusions. Things will be much clearer some years out....after all the tombstones are inscribed....

The article states: ""The figures from Jakarta’s Department of Parks and Cemeteries do not identify the cause of death, but no other new epidemics have been reported in Jakarta over the period and nor were there any major natural disasters."....

But there WAS major natural disasters...there has been some major flooding not only in January but the end of February...displacing thousands of people, destroying entire neighborhoods, not to mention submerging their main hospital and requiring power to be shut off. When you have 5 feet of water in buildings and in the streets, I'm sure that is a major health concern (like it was in New Orleans after Katrina) but we will never know how many of those deaths in March can be linked to the flooding the end of February.

That's not to say that some of those deaths were not directly caused by Covid-19, but it doesn't seem plausible to say that none were linked to the flooding, which is what the article alluded.

bot MRO Jun/Jul calendar calls for a dime

That should make you some money....

Squeaked into the following:

AAL May15 11 CALL @ $0.93

Can't help but think we are going to start seeing a little bit of upside on airlines soon....enough to make some money, anyway...

maybe so. I think we are months out from real uptick in commercial air traffic volume. All it will take though is some positive (and solid) news re: Therapeutics and coordinated testing and I think that will seal the bottom in equities, even the airline stox

The good thing about options is that the underlying stock doesn't have to make huge moves to make money, especially those contracts that are close to in-the-money options....