It was early in the night, 2 friends and I arrived to a house party roughly 10 mins from where we live. I pregamed with caffiene cause I don’t drink and so did one of my other friends, the third one did bring some beer tho. So anyways I get around to talking to some people and I start talking to a girl that’s deadass a sociology and gender studies major.
We end up talking about the conflict in Iran, and I… in all of my infinite wisdom end up explaining to her my full DD on shorting IWM and GLD.
This poor girl listened to me explain that prolonged shocks to oil lead to inflation due the cost of transportation and many other things increasing as a result of the increase in the price of crude oil. If the inflation is sustained then the fed may be incentivized to increase the rates, this would increase the oppertunity cost of holding T-Bills against gold and the USD appreciation (america is a petro state/net exporter of crude). Which would result in a sell of off, IMO shorting gold is still questionable because gold is a hedge against inflation and geo political instability. I currently don’t have a position on it but i’m watching it closely.
IWM is a clean play, the small/medium caps get squeezed if borrowing becomes expensive and transport costs increase due to the spike in the prices of oil, you can also account for a decrease in demand for their products as a result of inflation+increased borrowing cost. This will squeeze margins and ultimately lead to a sell off.
Needless to say she did not talk to me again.
TDLR; explained to a girl at a party why i’m shorting IWM and GLD even though she didn’t ask.
Position:
IWM 205P 09/18/26
maybe puts on gld?
I’m planning on holding the IWM contract for a few weeks to a month hoping the extrinsic value appreciates, i’ll consider rolling it if I’m still firm on the fed hiking the rates.