1. MEMORANDUM 2
Date: February 14, 2015
To: Professor Lawrence A. Souza
From: Amrutha Rajendra
Re: Oil prices to drop by 10% over the next three months
We are tracking OIL prices. Based on our research, we forecast the price of oil to drop by 10% over the
next three months based on following three factors: Strengthening the US dollar, increased fracking
operations in the US and lowering oil demand in U.S and China. We recommend the following 32 trades.
Indexes (2) ETFs (3) Stocks (5)
 Write Forwards  Sell short  Sell short
 Write Futures  Write call options  Write call options
 Write call options on futures  Buy put options  Buy put options
 Buy put option on futures
Trades (8) (9) (15)
Tickers: XOI & IYE Tickers: XOP, IEO& PXE Tickers: TOT, OXY, IMO, CVX
& SNP
Total: 32 trades
We are tracking Oil prices. Based on our research, we forecast the price of oil to drop by 10% over the
next three months based on following three factors: Strengthening the US dollar, increased fracking
operations in the US and lower oil demand in U.S and China . We recommend the previously listed 32
trades.
 Stronger dollar makes oil more expensive for buyers
using foreign currency.
 Many energy companies have found it profitable to
extract oil from shale formations, using techniques
like fracking & horizontal drilling.
 Countries like Indonesia & Iran have been cutting
back on subsidies for fuel users.
 The market is oversupplied and refineries are
expected to enter into a seasonal maintenance. The
demand for crude oil, and global inventories
continue to decrease.