Today we discussed the markets, the economy, geopolitical tensions, and especially oil. The conflict involving Iran is beginning to alter some of the assumptions investors use when pricing stocks. One clear impact is that consumers will likely face higher fuel costs.
A spike in oil prices tends to benefit energy producers while putting pressure on consumers. The big question now is whether oil can remain above $100 per barrel in the near term. In our view, that outcome is unlikely. However, a sharp drop back to $60 per barrel also seems improbable in 2026.
The most likely scenario is that oil prices settle at a higher overall range, meaning elevated energy costs could be with us for some time.
We made a couple of changes to the portfolio as follows:
Took profits on our UBER 1×2 Put Spread as follows:
Sell to close: UBER March 20th (monthly) 77.50 strike put (ratio of 1)
Buy to close: UBER March 20th (monthly) 70.00 strike put (ratio of 2)
Credit: 2.75
Replaced it with just a simple short put at a much lower strike.
Sell to open: UBER March 20th (monthly) 65.00 strike put
Credit: 0.45
Max gain = 0.45 or $45.00
Max risk = owning 100 shares at 64.55 cost basis
Entered into a longer-dated 1×2 Put Spread in OXY as follows:
Buy to open: OXY May 15th (monthly) 55.00 strike put (ratio of 1)
Sell to open: OXY May 15th (monthly) 50.00 strike put (ratio of 2)
Debit: 0.31
Probable Risk = 0.31 or $31.00 per spread
Max Risk = owing 100 shares at a cost basis of 45.31
Max Reward = 4.69 or $469.00 per spread