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If you have an immediate need, you don't have much of a choice. Keep up the idea generation.

It's great you're thinking about this stuff, but the simplicity with which you imagine a trade like this can be executed is just not accurate. After costs your $4 dwindles to $2.50-3.00, and the only way this becomes risk free is if the Aug $96 put can be bought for less than $2.50-3.00...

Okay, you really need to move away from this "risk free" idea because it's not the case. Per your own example, let's say we have the following: April $100 Aug $96 You sell physical crude at $100 and empty out your tanks. You buy Aug futures at $96.00 to hedge your injection. If...

+2

G and H vols are up 5-6% since yesterday. F and the rest of the curve vols were up only ~.5-1.0%. H/J was screaming today.

Current curve is certainly not the norm and yes, the cal spreads are nuts. F/G and F/H got slammed. Front and red H/J have had a nice run. This move has been interesting.

Late bloomer.

You will enjoy Downey's Oil 101.

Codecademy

Started with Peter Lynch's Beating the Street when I was 13. Moved on to more complex after that.

Overall inventories are down across the US. Shoulder months (spring/fall) are always tricky as refineries switch configurations so it's difficult to find any type of finality or certainty in this analysis. Often times prices cannot be justified.

Spring (Feb-Mar) is currently more expensive than the summer (Apr-Oct) strip, so not sure why you suggest "spring months are much cheaper than summer." Any seasonality in crude stems from the seasonality of the products, so you should consider HO and Rbob fundamentals in your dialogue...

I would not consider your trade an arb. You're still taking huge risk withdrawing from storage. If you're long futures as a hedge for the barrels you now have to inject and prices fall, your gain buying the physical lower will be offset by the loss on futures. So now you have an...

You can't do a storage arb in a backwardated market. And there is no hard and fast rule that says prices must converge. Storage costs are about 40-50 cents/bbl in today's market, there really isn't much to "take advantage of."

Every major curve in the world has been backwardated for the last ~18-24 months or so. Marginal supply disruption (Iran/Libya), weak cracks across Europe, product glut and decent cracks in the U.S, strong demand in Asia (but weak/negative cracks). The conventional rhyme or reason to the...

Precisely.

It was usually quality content and we have similar tastes in art. I took mine down too; not much upside in publishing.

Jeff, that's been a good story since the day it was on your blog. I executed a trade several years ago when natural gas was trading above $10+/mmbtu. At the time I had a customer looking to hedge some forward production in the summer, so they wanted to sell the June-Oct strip of the...

8am - 1:30pm CST.

If only more homeys would become more vocal about their own violent culture.