Monday, February 06, 2006

Oil Update

The Oil sector reversed sharply today and our favorite APC is rejecting the short setup. Well, from gamma perspectvie we went from a decent profit to flat to a small profit (on the other side of the swing). From pure stock perspective we went to a big whopping zero. We liquidated all net delta short positions in oil but kept gamma.

So, we're back to delta neutral with a view to get bullish if the current levels of OIH hold. If, however oil does sell off throughout he day, we will be looking to reenter short delta positions.

Yes, we are allowed to change our minds frequently because ... in this game it's much more important to make money then be right.

By the way, one thing that hasn't changed in my mind is that Oil does present a massive opportunity right now - it just may be that it goes a lot higher rather than a lot lower. Read: own gamma.

Cheers,
/Dmitry

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