SO LIGHT, SO SWEET!….A reader writes concerning my post last night about the Tierney/Simmons bet on oil prices:
If you are serious about taking up Simmons’s side of the “original bet” against Tierney, you should simply buy futures or options.
For example, you could buy a call option for Dec 2010 on 1000 barrels of crude oil for about $5,800 (yesterday’s prices). If the price indeed goes up to $85, you would make a $15,000 profit…even better than what you’d get from Tierney.
Go ahead, take the plunge…you can even blog about it!
He’s right, of course. This didn’t occur to me because my most sophisticated financial transactions in the past have mostly involved flipping a coin to decide which mutual funds to invest my 401(k) in. Call options on light sweet crude never showed up as one of my choices.
But it’s a good thought, isn’t it, for someone who thinks we’re likely to see oil production peak sometime in the next few years? I wonder if I can talk Marian into this….?