Interesting Long / Short Trade

In doing my weekly review of markets and listening to podcasts, I came across an interesting trade setup, given the current market environment that seems to favor higher and more persistent inflation than perhaps what some market participants believe.  There are those, of course, that believe the inflation we are currently seeing is transitory and you only need to look at several key commodities that have fallen off their recent parabolic highs (i.e., copper and lumber), although they continue to remain at elevated levels relative to last year - lumber is still up 83% over last year's price, copper is still up 49% from a year ago.  Oil is the one notable exception to the trend, its price continuing to rise steadily this year from last year's lows, the chart showing a very bullish trend:

Brent Crude

Indeed, some analysts are predicting $100 / barrel oil by next year, last seen in 2014.  This would certainly contribute to inflation.
Meanwhile, gold continues to consolidate around $1,800 / ounce and looks like it's ready to move higher (will require dollar weakness and low real interest rates to really get moving - assuming no change to current fiscal and monetary policy trends, this seems a probable outcome):

Gold
At the same time, major stock market indices continue to make all time highs.  Inflationary periods historically tend to favor commodities ("hard" assets) over financial assets like stocks and bonds:

S&P 500

NASDAQ

DJIA
So the trade idea is to buy long dated puts on NASDAQ (QQQ) and S&P500 (SPY) and maybe even DJIA (DIA) and buy long-dated calls on USO and GDX/GDXJ.  If inflation indeed continues to hang around as many expect, it could prove to be a catalyst for a stock market sell off (many think at least a small 10% or so stock market correction is overdue anyway, which could provide an opportunity to take early profits on the puts).  Gold and oil should benefit from these inflationary forces.  Gold miner indices GDX / GDXJ are a great way to make a leveraged bet on gold.  USO is a good way to bet on oil but you can also invest in energy ETF's like XLE.  If you are strong in your long-term conviction for gold and oil and you have the capital, it might make more sense to just buy XLE, USO, GDX and GDXJ directly and hold and possibly hedge your equity positions by buying UVXY or a similar ETF.  Otherwise, if you have limited capital, buying puts and calls might be a better choice.
I hope you find this post useful as you chart your personal financial course and Build a Financial Fortress in 2021.  To see all my books on investing and leadership, click here.  
  Stay safe, healthy and positive.