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duc's Commodity Trading Thread

Discussion in 'Commodities' started by ducati916, Nov 21, 2018.

  1. ducati916

    ducati916

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    Exit soybeans....had planned to let this run, but, was exited for [+].

    jog on
    duc
     
  2. ducati916

    ducati916

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    Just SOLD the 10yr Note. Counter-trend trade [won't be in long]

    jog on
    duc
     
  3. ducati916

    ducati916

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    Closed for a [-]

    Well that was quick!

    jog on
    duc
     
  4. ducati916

    ducati916

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    So Oil:


    Wall Street: Oil prices will rebound. Most major investment banks are forecasting a rebound in oil prices in 2019. Price forecasts vary widely, but most have both WTI and Brent above current spot prices. Bank of America Merrill Lync, for instance, sees WTI averaging $59 per barrel in 2019. Citi is at the bearish end with a $49 price target. For Brent, Barclays says the benchmark will average $72, and a half dozen other investment banks have price estimates within a few dollars of that price.

    Middle East oil producers hit by U.S. shale. As Bloomberg reports, U.S. shale is hitting major oil exporters from the Middle East on multiple fronts. For one, soaring production is lowering prices. But also, U.S. shipments of light crude to Asia are undercutting Saudi exports to the region. Moreover, U.S. exports of refined gasoline and naptha is creating a glut of those products in Asia, forcing prices lower.

    Natural gas prices in Permian fell to zero, but rebounded. The glut of natural gas supply in the Permian basin – a byproduct of oil drilling – and the shortage of pipelines to take that gas to market, has led to a crash in prices. In November, natural gas prices traded near zero for much of the month, and even dipped into negative territory. Prices have since rebounded to $1.68/MMBtu in December. The inauguration of new oil pipelines next year could exacerbate the gas problem, as more takeaway capacity could lead to more drilling, which will lead to more gas production. “You’ll see things get worse and worse and worse as oil production grows and gas production grows alongside it,” J.R. Weston, an analyst for Raymond James & Associates Inc., told the Wall Street Journal.

    The COT numbers should be out tomorrow, but with Christmas, they may be [very] late again. I however, am starting to feel bullish on oil [again].

    jog on
    duc
     
  5. ducati916

    ducati916

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    So the plan is: see if the COT numbers turn up. If they do, see what the number is. If not, then I will looking to be getting long [as close to] $45 as possible. I'll probably have a stop at $44.35'ish.

    Which means that I'm also bullish on the S&P500. The two are trading pretty tightly at the moment. I'd be looking at 2483.50'ish

    Of the two charts, I like the S&P500 better. Might just double the position on that one.

    jog on
    duc
     
  6. ducati916

    ducati916

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    December 22, 2018: During the shutdown of the federal government, the Commitments of Traders report will not be published. When the federal government operations return to normal, CFTC will resume publication of the Commitments of Traders report.

    December 21, 2018: Since December 25, 2018 and January 1, 2019 (both Federal Holidays) are on Tuesday, the next two releases of Commitment of Traders will use Monday data while the publication date will be Friday as usual
     
  7. ducati916

    ducati916

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    The news out of oil is bullish:

    Oil prices poised for large weekly gain. Brent and WTI are set to close out the week with the largest weekly gain since December 2016. This week, crude benchmarks could gain as much as 10 percent, owing to Saudi production cuts and a broader sense that the oil selloff has gone far enough. “Underpinning this wave of buying is mounting evidence that Saudi Arabia has taken an axe to its oil production,” Stephen Brennock, an analyst at PVM Oil Associates Ltd., told Bloomberg.

    U.S.-China trade talks. U.S. and Chinese officials are set to meet on Monday to resume trade talks, and news of the meeting bolstered sentiment in financial markets. The three-month truce in the U.S.-China trade war ends in March, but the tone from officials from both countries has thawed recently. The shakiness in the global economy, which the trade war has contributed to, is also putting pressure on both sides to back away from the brink. “China has a strong desire to have a truce on trade war,” Shi Yinhong, a professor of international relations at Renmin University in Beijing, told the FT. “[T]he probability of the two sides reaching an agreement within the 90 days is growing”.

    Shale issues"


    U.S. shale activity slowed in fourth quarter. The collapse of oil prices in the fourth quarter of 2018 led to a slowdown in the shale patch. The business activity indexpublished by the Federal Reserve Bank of Dallas show that activity decelerated and production growth slowed. The data suggests that the U.S. shale industry was very responsive and sensitive to lower oil prices. The average prediction for year-end WTI prices from oil and gas executives was $59 per barrel.

    U.S. shale production problems. The Wall Street Journal reported that U.S. shale companies have over-hyped the production potential from thousands of shale wells. “Two-thirds of projections made by the fracking companies between 2014 and 2017 in America’s four hottest drilling regions appear to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota,” the WSJ wrote. “Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast for those areas.” The WSJ calculated that the lower-than-expected production adds up to nearly one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices.

    Still no COT numbers.

    jog on
    duc
     
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  8. ducati916

    ducati916

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    Oil prices continue to post gains, extending a rally that is the longest in 17 months. The latest optimism centers on the ratcheting down of tensions between the U.S. and China, as well as a softer tone from the U.S. Federal Reserve. In the oil market, the OPEC+ cuts are phasing in, while Saudi Arabia has pledged to cut even deeper. “Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, toldBloomberg. “They can be very convincing when they choose to be. And so we see the potential for Brent crude to go to $70 a barrel over the course of the year.”

    Saudi plans cuts to boost prices. Saudi Arabia will reportedly cut oil exports by 800,000 bpd below November levels, going beyond what it had promised as part of the OPEC+ agreement. The Wall Street Journal reports that the Saudis are cutting deeper in hopes of engineering a price rise to $80 per barrel. Oil prices rose sharply on the news on Monday, but the market still seems too soft for a return to $80 per barrel anytime soon. Riyadh is under fiscal pressure as the Saudi budget does not breakeven unless oil prices are in the mid-$80s.

    jog on
    duc
     
  9. ducati916

    ducati916

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    Long US Treasury 10yr

    Screen Shot 2019-01-11 at 6.55.22 AM.png

    Which means short everything else.

    POO and stocks have had a stellar bounce, run, move higher. If US Treasury yields move higher again, I think all other assets will have a bit of a retrace.

    jog on
    duc
     
  10. ducati916

    ducati916

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    Close for a loss.

    jog on
    duc
     
  11. ducati916

    ducati916

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    Turns out, a touch early

    Screen Shot 2019-01-12 at 7.28.23 AM.png

    C'est la vie.

    jog on
    duc
     
  12. ducati916

    ducati916

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    Try again, LONG US 10 Yr yield.

    jog on
    duc
     
  13. ducati916

    ducati916

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    Oil entered a bull market this week, having gained 20 percent since the low point reached in December. WTI rose above $52 per barrel, while Brent moved above $61. “The mood brightens, and the market realizes that the world economy and oil demand are not grinding to a halt,” Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich, told Bloomberg. “Moreover, there is confidence that the petro-nations will cut supplies as promised to balance the market.”

    Saudi Aramco releases audit of oil reserves. Saudi Aramco released figures on its oil reserves this week, a figure that has been the subject of speculation for decades. The independent audit was originally initiated in anticipation of Saudi Aramco’s now-delayed IPO. The audit largely confirmed what Saudi officials have long said – that the Kingdom is sitting on massive reserves. The audit revealed 266.3 billion barrels of oil reserves and 307.9 trillion cubic feet of natural gas. Meanwhile, Aramco is expected to issue its first ever international bond sale later this year, with plans to use the proceeds to finance its acquisition of petrochemical giant Sabic.

    jog on
    duc
     
  14. ducati916

    ducati916

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    So on the NFLX trade: sell short a further 80 shares at $333.27. Total short 180.

    Call Price at $63.20 so a profit of $7,870
    Shares sold at $274.64 x 100 = loss of [-5,863]

    Net +$2,007

    Trade is still open.

    In hindsight, I would like to have lightened up on the short position when NFLX had a bit of a swoon with the market.


    jog on
    duc
     
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  15. ducati916

    ducati916

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    US Ten Year yields are looking bullish. Which generally means that stocks are due a tumble. You could certainly argue that they are at a resistance point technically, but I would also say that it looks as if it will fail to hold the 10yr back.

    Screen Shot 2019-01-15 at 4.24.59 PM.png

    jog on
    duc
     
  16. ducati916

    ducati916

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    So I have now closed the NFLX trade.

    Closed stock short for loss of $10,098.40
    Closed Option longs for gain of $16,910.00

    Net profit $6,811.60 [not inc. comms.]

    jog on
    duc
     
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  17. ducati916

    ducati916

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    So I have a new trade to put on tomorrow to replace NFLX.

    jog on
    duc
     
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  18. peter2

    peter2

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    Good, I'd like to see more of these types of trades (Stock/option combinations) in this forum.
     
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  19. ducati916

    ducati916

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    The obvious advantage is that they are market neutral. That of course does not mean that they are without risk...far from it.

    The risk however is 'different' to price risk. It is volatility risk. Of course, planning ahead for earnings, can increase the probability of an escalation in volatility.

    The trade will be up tomorrow.

    jog on
    duc
     
  20. ducati916

    ducati916

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    So the new position: TSLA

    July 19 Expiration
    Buy 2 Calls @ $50.87
    Strike @ $350
    Sell Short Stock @ 348.11 [120 shares].

    IV = 60% [current]
    Theoretical Vol @ 85%
    HV = 74 [current daily volatility]
    HV over 4 year period H = 240 L = 100 [using monthly volatility]

    The tricky bit is estimating [guessing] what volatility might prevail. Within the expiry date, there should be a couple of earnings releases, usually this bumps up the volatility.

    Screen Shot 2019-01-17 at 7.24.29 AM.png

    jog on
    duc
     
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