With the likelihood of a recession increasing everyday due to oil and gas prices staying elevated. What is everyone buying puts on?

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by rappeasant

In case in one has been living underneath a rock, the Russia situation has added more stress to the supply chain problem we’ve been experiencing, specifically to oil and gas and other commodities.

Not every recession is triggered by oil and gas price increase of 50%. But every increase of oil and gas price of 50% has triggered a recession. There’s a common saying, “the best way to fight high oil and gas prices is high oil and gas prices”. What this means is that the price of oil and gas will get so high to the point that demand destruction will occur and businesses will no longer be able to turn a profit and have to resort to closing their operations and start laying off employees. When employees are laid off, people will start spend less money. When people spend less money, more business will have to close their operations and lay off more employees. And the cycle continues. Eventually, this will result in a recession, and as a result, oil and gas prices will come back down to earth.

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So if history repeats itself, we’ll be entering a recession if oil and gas prices stay this high. What is everyone buying puts on?

Here are some stocks that I’m looking into buying puts on:

  1. Expedia (expe). Stock is near all time highs. Ain’t no one traveling with oil and gas prices being so high, which directly impacts the prices of tickets.
  2. Seaworld (seas). Stock is near all time highs. Ain’t no one going to seaworld to see dolphins flip in water when they can’t even afford to drive to commute to work
  3. Wayfair (W) ain’t no one paying for new furniture at home, when they already bought everything they needed from Covid.
  4. Etsy (Etsy). Ain’t no one got money to pay for expensive homemade goods during a recession. They be buying at dollar stores

This is all I have now. I will make an updated post of all the other stocks that come to mind to buy puts on during a recession. Please include rationale as to why the stock would underperform in a recession.

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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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