Create Options 'Basket' Profits

Create Options 'Basket' Profits
by 09/05/08

You know things are pretty bad in the economy when even the gas-station owners, particularly the smaller guys, can't even afford to refill their pumps because the cost of gas is too outrageous.

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Not only that, but with three-quarters of consumers buying their fuel with credit cards, the pain at the pump they're enduring is passed back to the station owners, who in turn are paying bigger fees to the credit card companies. Add the fact that many pumps have caps on how much you can spend in a single transaction, and the station owners' profits are getting hit twice.

You may even notice an increase of stations offering a discount for those customers who choose to pay cash. In my neighborhood in the Washington, D.C., area, you can always see those stations from a mile away because the lines for those pumps are often bleeding out into the city streets for consumers desperate to save a few bucks.

It also says something when oil conglomerate ExxonMobil (XOM) is even getting out of the filling-station game, as the company recently announced it's spinning off 2,200 stations. It just goes to show that your local gas stations aren't printing money, after all, especially when they're competing to get your business by trying to beat other nearby stations' prices.

As a consumer, you may be ready to throw up your hands in defeat and surrender to the status quo. But as an options trader, you should be seeing dollar signs -- not (just) for Big Oil and commodities traders, but also for yourself.