Friday, February 19, 2010

Fed Raises Rates Causing Oil To Drop: Profit From Oil Going Up Or Down

The Fed has raised the discount window rate to 0.75%, causing a major boost to the US dollar and a corresponding drop in the price of oil. Will this be temporary or is it true that oil is still well overpriced at $75?

Here are straddles that allow investors to profit from oil going up or down, regardless of direction, as long as the underlying security moves the minimum amount.

Our favorite vehicle for these is UCO. USO is also shown. I theory UCO moves close to 2 times what USO moves. In reality this is not quite so, but its low price makes it attractive.

(please click to enlarge)

Computed with StraddlesCalc Tool. The aActula move needed may be smaller if there are still several days to expiration, as is the case now for March and April.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

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