Oil prices jumped because Trump said he'd attack Iran very hard. Not hard. Very hard. The adverb did most of the work there.
Futures traders immediately began pricing in supply disruptions through the Strait of Hormuz. Twenty percent of the world's oil flows through that narrow passage. But sure, your technical setup on crude was the reason you went long. Had nothing to do with missiles.
Some guy in New Jersey with a Robinhood account saw the headline and bought USO calls at the absolute top. He'll tell his friends he's trading geopolitical risk. He's not. He's gambling on whether Iran can close a waterway while the U.S. Fifth Fleet is parked in it. This is his edge.
The chart said oversold on the hourly. Iran said they'd retaliate. Both things can be true. Only one matters for your position.
Retail piled in after the move already happened. They saw oil up four percent and thought they were early. They weren't early. They were late to a headline trade that institutions made in the first thirty seconds. Now they're holding bags filled with geopolitical hope and time decay.
Trump could tweet that he's kidding tomorrow. Oil would give it all back in an hour. Your stop loss won't save you. It never does. You'll ride it down and call it conviction.
The Strait of Hormuz has been threatened approximately seven thousand times since 1979. It's closed exactly never. But this time feels different, right? It always does when you're already in the trade.
Somewhere right now a guy is explaining to his wife that Iran tensions are actually bullish for his tech portfolio because of energy sector rotation, and she's wondering if it's too late to keep her maiden name.
Photo by Saifee Art on Unsplash
Leave a Comment