So the consensus from the last three weeks of research is that if as retail investor you would like to take exposure to oil (going up or going down), the best bet is USO. An ETF that is relatively liquid compared to other ETFs and ETN’s. And as Seeking Alpha points out keep an eye…Read more
Trading crude oil futures on NYMEX – contract specifications
From the NYMEX website Light Sweet Crude (CL) Futures: 1,000 U.S. barrels (42,000 U.S. gallons) Options: One light, sweet crude oil futures contract. Trading Months Futures: 30 consecutive months commencing with the next calendar month plus long-dated contracts listed at 48, 60, 72, and 84 months prior to delivery. Options: 12 consecutive months plus 3…Read more
Crude Oil Insights – Hedging oil exposure, tests of hedge effectiveness and correlations of crude oil blends across time
Trailing correlation across crude oil blends from 1995 – 2010. Great data, lovely graphs but terrible news for hedge effectiveness test as per accounting standards.
Crude Oil Insights – Trading options on Oil – Strategy review
Long Call A call option is suitable when your outlook for the market is bullish. Since you are purchasing the call option, you need to allow enough time to expiration for the stock to move and reduce the effect of time decay. The potential gain in this strategy is unlimited, whereas, the maximum loss…Read more
Crude Oil prices: The Euro crisis, its implication on interim oil prices, Euro-zone and PIGS growth forecasts
Crude oil prices in Europe are now more expensive in relative terms than crude prices in the US. Take a look at the two charts presented below
Crude Oil Price outlook: What can a barrel of oil buy?
What can a barrel of crude oil buy and does that tell us anything at all about the direction and relative value of oil prices. Staring Monday morning I will officially go ahead and short oil. For the rationale for this suicidal move, please see the following evidence. Price across the commodity universe are back…Read more
What really happened at Goldman – A guide for laymen
What really happened at Goldman? Step number one – successful hedge fund manager calls XX and tells them that he wants to short certain kind of mortgages because they will lose value – “I want to short this crap” Step number two – Goldman goes and finds the other side – “who wants to go…Read more
Oil price outlook: Goldman, Volcanic Ash, and oil prices
Asia takes oil to below 82 on Goldman and travel disruption in Europe on account of the volcanic ash cloud. Expect more pressure as New York opens Monday morning and the entire commodity group heads south. As I said earlier today while Goldman will most likely only suffer a few minor bruises, oil and commodity…Read more
The Goldman-Sachs-SEC suit fall out: Impact on crude oil and gold prices
Towards the end of last week a key event happened that will stall and possibly break the rally in oil and gold prices and dominate markets and news for the next month. It was the SEC lawsuit against Goldman for “in-appropriate” conduct related to misstatement of facts on a CDO (Collateralized Debt Obligation) transaction linked…Read more
Bank of England and European Central Bank Rate decision
Bank of England holds rates steady at 0.5%. European central bank holds rates steady at 1%.