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PaperclipPerfector  4d ago (text post)   2449 thread views

Friday Fun Thread for March 6, 2026

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Best Hindsight Trader: If, around 15-25 February, you thought trump was going to attack iran in the next weeks, what should you have done ?

Buy oom USO calls expiring march 20 for 1500 % gain. Which are just repackaged oil futures, but I'm not fucking with margin.

What I did instead: bought oom spy puts expiring march 20. Exited yesterday for modest gains.

Very interesting that the other possibility, short-term oom calls on american oil companies, also wouldn't have worked. Despite the record rise in oil prices, they barely moved. Apparently the market thinks this will all blow over in a week? OK, buying oom calls on oil companies.

It might've worked if you closed the position right at market open, when the euphoria was at its peak.

Resource producers (almost) always lag these kind of spikes because they can't really profit that much from them unless the change is confirmed to be structural.

I don't believe the market anymore. I imagine my counterpart: a guy in glasses looking at the discrepancy between the rising oil prices and the unmoved oil companies; not reacting, because he thinks he knows those companies, their current balance sheets, he has status quo bias; he thinks that surely things will go back, trump will taco, and the future curve has a reassuring bend; but in reality, this is merely probable, it's not sure at all. They are not the same companies they were a month ago; the possibility that the hormuz strait stays closed should be priced in, and it isn't.

"The market can stay irrational longer than you stay solvent" is definitely the investing phrase of the decade.

Decade?

the possibility that the hormuz strait stays closed should be priced in, and it isn't.

How do you know it isn't? In a counterfactual world in which Ukraine pulls off some epic drone based operation that causes the Russian oil industry to completely collapse such that oil prices rise to the exact level they are at, I'm assuming oil company stocks pump. Given, as you've said, that oil prices are way up but American oil producer stocks are flat, we can assume there is risk priced in.

Also there's the "Trump put" effect, or in this case it would be the "Trump call" (I know this fell apart in April, but likely relevant here if not the S&P). If oil prices pump (hah) too high for too long he loses the midterms really really bad. There is literally nothing the median American hates more than a high gas price. So if the straights closed in a serious way I'd assume all of a sudden negotiations with Iran would conclude, America would "win" something in the negotiations, and the war would immediately end and the straights would re-open.

Sure, but:

  • Just because the stock prices would likely pump then (when it is 100% obvious production is fucked for X time), doesn't mean they're correct not to pump now (when things are more complicated, timeline-wise). Even a blind man will start running when he hears everyone panicking.
  • if, hypothetically, oil stocks would refuse to move then, you would still hold on to your assumption that the market knows better, and propose alternative explanations!
  • there already is some damage to middle eastern oil facilities

I love your name btw

I don't entirely understand your comment, but reading it though the lens of "Tintin thinks the market is underpricing oil stocks" helps

To your bullets

  1. my assumption is that the market is generally good at pricing things, so given the stocks aren't up, it's likely (not guaranteed) that the gang knows things I don't. This is a low bar as I don't know much about the oil industry. I just know a lot about finance and valuations in general.

  2. in that hypothetical I would be quite confused actually as that seems like a windfall of "the resource you're extracting is nore expensive now, your costs are the same, party time". I was able to come up with a plausible reason the oil stocks haven't gone up right now, I got none for my Ukranian oil shortage one. I could just be biasing my own ideas, but I'm at a loss.

  3. that kind of supports my thesis that the increased margin (which should lead to higher stock valuation) is being offset by the damage and risk to their oil assets?

A totally fun aside, while I'm generally a supporter of the weak-form efficient market hypothesis, an incredible counter point to it has been the SAASpocolypse. All the information causing the SAASpocolypse was theoretically known in late Nov 2025 and was painfully obvious over Christmas break when everyone on Twitter started posting about vibe coding. But the selloff didn't start until ~Jan 29. Huge hit to the EMH.

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