Is Oil Ready To Drop?

One of the ways that KDK Fund makes money is through short term (less than 6 months) speculative options trading. For example, KDK Fund currently owns a UUP (US Dollar) $21.50 call with an expiration of January 24th. The most recent status of the trade can be found here. KDK Fund is regularly learning about other opportunities.

One such opportunity that is starting to gain favor with KDK Fund is the idea that oil prices are set to fall for 2014. There are a few items that KDK Fund has found to support this argument.

One major piece of the argument rests in the fact that the world is starting to produce a growing amount of oil. So much so that there are multiple reports now that the rate of growth is to outpace the growth of the refining ability and global GDP estimates. In the United States, oil growth is getting to a point where projections are that the US will be oil independent in the next 5-7 years. Mexico is looking to release land that was under government control to private oil companies for exploration research. This could nearly double output. When you add oil output from Iraq and other places in the Middle East on the market, the result should be pressure on the market price.

Another large item that supports this view is the expected rising value of the US Dollar. As the dollar increases in value, the price of oil should decrease accordingly. With the Federal Reserve decreasing their QE assistance, the value of the US Dollar should increase. This is part of the reason the current dollar trade is going on.

The USO ETF is nearing multi year support in the $32.00 region. A break of that could drop the ETF to $30.00 first and a continuation to as low as $25.00.

KDK Fund will be watching the ETF USO with eyes particularly on the put side of the options market. No trade is planned yet; just research. Any action taken will be reported.

**All posts on this blog are information and opinions only. They are not to be considered recommendations to buy or sell any security. Please do your due diligence first before trading and investing.** 

KDK Fund Dec 21 Weekly Report (IAU, UUP, REIT, and more)

KDK Fund had the busiest week in its existence so far. It was a whopping 2 trades :). KDK Fund sold its December IAU $12.00 Put. You can read about it here. It also bought a Jan 4th week UUP $21.50 call option.  You can read about the specifics including why the trade was made here.

KDK Fund also found a Real Estate REIT named Realty Corp. that it will purchase shares of in 2014. The dividend is currently at 5% and is given on a monthly basis.

**All posts on this blog are information and opinions only. They are not to be considered recommendations to buy or sell any security. Please do your due diligence first before trading and investing.**

End of IAU $12.00 Put Trade

The IAU $12.00 Put trade has ended. The put was sold for $0.35. That is a gain of $0.10 on the trade before commissions and fees. IAU was trading at $11.60 at the time of the options sale.

KDK will now look in the market over the next week to find another options trade.

**All posts on this blog are information and opinions only. They are not to be considered recommendations to buy or sell any security. Please do your due diligence first before trading and investing.**

First Options Trade Made ($12.00 December Put)

The account just purchased the IAU December $12.00 put. The cost was $0.25 before commissions and expenses. The goal of the trade is to see the option sold at $1.00.

The trade was made based on the following fundamental and technical factors:

- Taper talk is back

- The chart is hitting the bottom of its range (strong possibility of breaking through to $11.00)

- Strong talk about capital rotation out of gold into other assets like stocks

- End of year sales of losers to gain tax advantages

Options Plan for 2014

Hey all

The options plan for the KDK Fund will consist of using a portion of funds to speculate on stock and ETF options in order to capitalize on momentum moves. The focus of the options account will be to find options on stocks or ETF's that have the likely hood of a large enough move in either direction during a particular period of time so that it can produce 100%+ returns on the option purchased. After commissions, taxes, and fees are taken out of winning trades, 50% of the rest of the profit will be put into the stock/bond portion of the fund. A losing trades max loss will occur at the 50% level. A rules base is being created to find the options that will be traded.

There are many reasons why a particular option will be purchased. Technical and fundamental research will be used for analysis. News will be a big driver. Time frames on the options will vary. There could be an earnings release with plenty of volatility within the stock or ETF. There could be a government decision made that will affect currency and general stock markets. There could be a management shakeup. There could be a natural disaster. The stock or ETF could be in a very predictable trend. There could be speculation of a merger.

** This blog is just information  regarding a particular fund. It is not to be taken as a recommendation to buy or sell any security. Do your own due diligence.**