Energy Prospectus

Does anyone know what is the best long-dated, deep out of the money oil option to buy?

Thanks
Scott

Don't know about options but the Crude Dec 2025 is selling for only $60.

I don't know why the futures are $ 16 lower than current market

Just remember that NYMEX futures are not a forecast. They are just the prices for commodities that you can lock in today. Discounts on the futures contracts that are dated years from now just reflect the risk that traders believe supply MIGHT exceed demand in the future. Also, keep in mind that futures beyond 2022 are very thinly traded.

If you believe (as I do) that oil prices are heading higher in the future, take a look at the minerals companies in our High Yield Income Portfolio. Brigham Minerals (MNRL) and Viper Energy Partners LP (VNOM) are heavily weighted to oil and they pay quarterly dividends that are a high percentage of their cash flow from operations. They are both taxed as C-Corps, so appropriate for IRAs.

NONE of MNRL's production is hedged.

VNOM is a much larger company that was created and is controlled by Diamondback Energy (FANG). They do have some "Bad Hedges" that expire in a few days, so their dividends should go higher in 2022.

I own Dec 22 options on futures. As Dan mentioned if you move further out liquidity becomes an issue as there is little open interest. I own a lot more oil equities but the options do offer the advantage of zero political / jurisdictional risk. I think we will see Washington mandated price controls next year, but I am not sure what the net impact will be on the oil industry.

If the federal government puts price controls on crude oil and/or oil-based refined products it will make the coming energy crisis much worse. They need to let the markets work this out. Team Bidens "war" on oil, gas and coal is stupid since they have no viable alternative to the massive amount of energy we get from hydrocarbons.

I have nothing against wind, solar, nuclear, hydro being part of our energy mix. However, the political wackos should not be in charge of the world's energy policy.