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Oil has shown a lot of strength this year. The oil bulls were right, though a bit of luck was involved. The dollar sank, and the oil thug states produced even less oil than expected. So you have $80 oil. A year ago, I guessed $60 or less. Still, that is reality: The world's oil reserves are dominated by countries fairly deep into thug or anarchy territory, and thuggism and productivity are not pals. You have Libya, or Iraq, or Iran, or maybe Nigeria, or Venezuela, and the House of Saud, or Russia and the former states of the Soviet Union. Free enterprise and democracy are sneered at in every nation on the list. So, that being the case, oil may hang above $60, or even $75 a barrel for a while. Not as long as the doomsters think, but a while. Few are mentioning it now, but demand is falling. We may have seen global Peak Demand for fossil crude oil this year already. It is very dfficult to maintain a commodity price when demand falls every year. And that scenario is setting up right now. For now, the market is still tight, thanks to the 5 million to 10 millions of barrels a day that the thug nations effectively keep off the market. The doomsters mistake that for Peak Oil. You should call it Thug Oil. But hey, when the thugs are in charge, you have to pay tribute. I like the December $70 puts, now selling at $290. Sell those, and also sell December $90 calls at $390. In oil commodity lingo, that is called a strangle. These expire Nov 16. I doubt oil will run through $90 in the next 5 weeks or so of trading. It may sink below $70, but there are huge hedge funds protecting the bottom side of this market. There seems to be market action to push the NYMEX crude price above $80 near the 16th of every month (when options expire). If the market gets too close to one price of the other, you can buy back (hopefully, still at a profit from the other side of the strangle). Or, you can sell more. For example, if the market starts trading higher towards $90, then sell some more puts. Then, if it actually goes through $90, you have insurance. One worry note: The New Yorker magazine has extensive reporting on U.S. plans to bomb Iran. Who knows? It will be bad for oil prices.

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