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Thanks! I managed to find the CL series.
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I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891 -
Re: Aeson
Yah. I'd still call this a form of speculation. It's speculation about the failability of being (personally) able to speculate with high enough accuracy to satisfy risk aversion.Originally posted by KrazyHorse
If you're fully hedged then you don't care what the price is.
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Energy futures:
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Originally posted by KrazyHorse
We're back at strike price, huh Dan...with almost 2.5 years left to go...
I feel pretty good about my position, although the futures are still against me.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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I can bet you feel better now than you did 6 months ago...Originally posted by DanS
I feel pretty good about my position12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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What was the bet?Comment
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Combination binary put/call with strike price 64 and expiry in march 2011. I took the long call/short put and Dan took the short call/long put12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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No doubt. That said, my experience helps me keep a level head about the price of oil.Originally posted by KrazyHorse
I can bet you feel better now than you did 6 months ago...I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Payoff on each in-the-money option was 50 cents.
In other words, I bet Dan 1$ that the price of oil would be 64$/bbl or more in March 201112-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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Seems like only the broker could win that bet
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I don't think that I can comment on that without claiming victory prematurely (and despite what the prices are at right now).
Let's let the bet run its course and then we'll discuss. To be sure, there have been a few surprises for me along the way.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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KH, ok so via arbitrage the futures market stabilizes prices (I.E. restricts the band in which the prices swing) so this lowers volatility and thus helps the real economy even if people speculate. This would be a good things in just about every case. The only exception I could think of would be if there were serious shortages like occurred in the 1970's.
If a real shortage occurred then the government might have to restrict the futures market because then people might be tempted to hoard oil buying on the spot, holding it, and then reselling it for a higher price as a future. This of course would be an extremely rare instance where the market doesn't function as intended. Other then that once in a life time situation I guess futures smooth prices rather then run prices up.
Thanks for answering my question.Try http://wordforge.net/index.php for discussion and debate.Comment
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a) If a supply shock that severe occurred then why would the futures price be even higher than the spot price? That would mean that people were expecting it to be even worse in the future. In that case it would be a good idea to hoard the oil and use it when it was even rarer. Arbitrageurs (if it were to come to this point, which it does not except extremely rarely) are therefore the voice of reason saying "don't use all the oil now".Originally posted by Oerdin
If a real shortage occurred then the government might have to restrict the futures market because then people might be tempted to hoard oil buying on the spot, holding it, and then reselling it for a higher price as a future.
b) Shortages, as such, only exist when there is some sort of restriction which stops the price from rising high enough fast enough to restrict demand enough to match the supply. In the 70s, this was caused by governmental price controls combined with (obviously, since at the fixed price there was a shortage) rationing, which is where all those pictures of people waiting in line to buy gas come from.12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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I'll just bet that oil is going to fall more than KH thinks it will.
I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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What do you think the low will be within 1 years time KH?I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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I'll bet that the futures market knows better than you how much the price of oil is going to be. Otherwise, as I said, feel free to buy in.Originally posted by Kidicious
I'll just bet that oil is going to fall more than KH thinks it will.
12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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