I entered the position back on 5-Jan-2007 during the period when the oil price hit $55 per barrel. Right after the position I posted the reason why I chose to take the risk investing in this stock. You can read it at What’s Your Bet Now Oil Is At $55?
It has since climbed above the resistance of $81 per share. It took almost three months to do that – the main reason why I always investing more than 120 days to option expiration for “oil stocks”. You see, oil or energy stocks are cyclical – I can almost swear that the worldwide oil price is controlled by the cartel of the middle-east countries with influence from United States. Or else how can you explain the cyclical pattern? When the oil price drop to below $60 per barrel, you can bet it always and almost will rebounce within the next 6 months (usually within 3 months).
Though this means trading option or investing oil stocks are rather expensive, you can almost can be sure of making money out of it. It’s a matter of how much money you want to make, which boils down to the question of how greedy you are. Somehow, as long as President Bush is sitting inside the Oval Office, you can pretty much know that oil price will never goes back to pre-historic period of below $50 per barrel (at least not for long).