A risky trade on “No War with Russia”

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by davefairtex

So here’s a risky trade I’ve moved into over the past week or so.  It is essentially betting on “No Winter War With Nuclear Armed Russia.”

See the chart below.  The candles are the price of ETF “RSX”, which owns stock in a bunch of Russian (Oligarch-owned) oil companies (Gazprom, Lukoil, Rosneft) among others.

The red line is the price of crude oil futures.  RSX and crude normally track pretty closely, but they have diverged wildlyover the past two months.  Oil has made new highs, while RSX has plunged by about 40%. This is what’s known as a divergence.  These things don’t happen so often, and sometimes they represent a real opportunity.

ycharts.com/companies/RSX

So if the Biden-Handler (a.k.a. the Ron Klain-Klaus Schwab) administration decides that they might not want to get into a nuclear exchange with Russia over Ukraine (in spite of all the exciting profit potential for Defense/Industrial, not to mention wiping the US off the superpower map – a long term “stretch goal” for Schwab) the price of RSX should spike higher.

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Theoretically anyway.

I’m long RSX.

Not financial advice.  This is a risky trade.  RSX could go a whole lot lower.  We could go to war.  Things could get much uglier.  Klain-Schwab might decide to toss the US into the trash bin after all.  You just never know.

But I thought the trade was an interesting concept.

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.

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