The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- At
Tactical Analysis: Theta (time decay) is working in our favor initially with the bull put spread, but the more time that goes by, theta starts turning negative and eating into our bull call spread. Mid-course Guidance: This is a highly bullish trade that oil will spike between now and June due to world events, or at least historically rise on the summer seasonal travel cycle. We like the "thrust to weight" ratio of this trade -- it's nearly 1 to 1. Risking $4,755 to potential make $4,245. But like in combat and trading, nothing goes as planned. Eject Level: At
Top Gun Options, we have strict risk management rules of engagement so we can live to fight another day if things go south on us. We would eject from this trade if USO started heading south as "world peace breaks out" and people decide not to drive this summer (SOLD! On both accounts). We'll keep a close eye on this afterburner trade since it's a double-edged sword -- when it goes right it rocks, when it doesn't, well...it doesn't. As always at TGO, we close the trade if the commit criteria change. Our bullish double vertical on Las Vegas Sands ( LVS) last week returned over 700% in one week. Profitability Target: The trade objective is to allow the spread to achieve max profit but we'd be looking to take profits in the model portfolio on any spike or significant movement. We would not hold that bull call spread to expiry, unless it went through the roof. Exit Tactic: Simply reverse the trades. Firing Line: Oil is here with us to stay no matter how many Chevy Volts the president wants to shove down our throats (production has been halted, BTW...good times) or how many solar companies get sweetheart deals from us -- the U.S. Taxpayer -- that eventually implode leaving us on the hook and deeper in debt. And with the anti-drilling mentality and killing of projects like the Keystone Pipeline by this administration, black gold is here to stay and will continue to be volatile as international and domestic issues dominate the headlines.