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I’ve got a trade idea that’s going to make some of you shake your heads, but hear me out. I want to short oil above $120.
Now, before you jump into the comments — I know what you’re thinking. Oil’s running. Iran’s a mess. Supply is tight. Every analyst on TV is calling for higher prices. And you know what?
They probably know more about the mechanics of oil supply and demand than I do. I’ll give them that.
But here’s the thing: I don’t care. This isn’t a supply-and-demand trade. It’s a political trade. Right now the market is reacting on emotion, fear and momentum — the kind of stuff that burns hot but burns out quickly.
When the dust settles, I think we’re going to look back at this move and realize it was way overdone.
The Math Doesn’t Add Up
Let’s start with the obvious: The percentage move in U.S. oil from the Iranian conflict is roughly twice as large as what we saw during the Russian invasion of Ukraine.
There’s no way the Iranian conflict has more long-term impact on oil prices than the regulations against Russia that lasted multiple months and turned into multiple years.
That conflict is still going on, and those regulations are still in place. So why is oil reacting like this is a bigger deal? Emotion. Fear. Momentum.
But those don’t last. When the dust settles, I think this entire spike is going to look exaggerated.
Trump’s Best Talking Point Is Running Away From Him
Here’s where it gets interesting…
Trump has pushed the idea that inflation is coming down starting with energy prices, and everything else will follow suit. And honestly? I agree with him — when energy comes down, it’s by far the best catalyst to bring inflation down everywhere else. But now oil is spiking.
His best talking point going into midterm elections is running away from him. Because of that, I feel very confident they’re going to do their absolute best to get this under control and push it back down.
They’ll hope voters have short enough memories that oil prices in mid-March won’t matter if they can push it lower before midterms really heat up. That’s the trade.
The Setup
So here’s my setup: Short United States Oil Fund (USO) above $120, even if it goes to $130 or $140, using a September or October expiration.
That gives me several months for the administration to take action. I actually tried to short USO at $121 recently and missed the fill by just a couple of pennies — it would’ve made over 100% profit in one day.
Still kicking myself over that one. But the setup is still there, and I think it’s pretty much a no-brainer trade.
If oil’s above $120 when you read this, I’ll be setting up that position. I’ll be using enough time to let this play out.
Sometimes the best trades aren’t about fundamentals — they’re about incentives. Right now, the incentive to push oil lower is massive.
Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook, and at 3:30 p.m. ET Closing Playbook!
Nate Tucci
Tucci Trades
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Why I’m skipping Nvidia, Amazon and Tesla
This might sound counterintuitive…
But if I were starting from scratch today with just $10,000 to invest…
I probably wouldn’t buy Tesla for robotics
I wouldn’t choose Amazon for e-commerce
I definitely wouldn’t make Nvidia (NVDA) my main AI bet
Not because those companies are bad. In fact, they’re incredible businesses.
But if you’re starting with a smaller account, the goal usually isn’t stability — it’s growth.
With only $10K to work with, I’d be looking for companies that have a real shot at doubling, maybe even more, over the next 12 months.
And while the robotics, e-commerce and AI sectors are exactly where I’d focus, the names I’d target would be very different from the obvious giants everyone already knows.
Of course, nothing in the market comes with guarantees.
But if I were building a portfolio from the ground up today, the stocks on my list would look nothing like the mainstream picks you hear about on TV.
In fact, I recently revealed this “Buy This … Sell That” watchlist live, including the names and the research behind them.
If you missed the session, the good news is you can still access it completely free today…
