Heating Oil spreads

cdcaveman · May 9, 2013

Quote from actionzip54:

I'm used to outrights so a 1 lot calendar, now 2 lot calendar, is child's play imo. Obviously anything can happen but my risk is fairly minimal right now.

I don't think I want to hedge because I feel like there is alot of edge in the posistion I have on now. I'm looking for more of a directional move than just capturing the carry. I'm not sure how liquid alot of those back month spreads are anyways.

Thanks for contributing guys. Energy spreads are not exactly something I get to talk about in my social circles.

Q/V is very liquid.. you would do this with +1M/-2Q/+1V you betting on a break out.. its at the top of a long term channel right now.. obviously .. i know i'm not telling you anything.. but you won't lose edge by putting on flys.. you will gain edge by the fact that its such a good hedge.. just a guess though.. watch it..

actionzip54 · May 9, 2013

Quote from cdcaveman:

Q/V is very liquid.. you would do this with +1M/-2Q/+1V you betting on a break out.. its at the top of a long term channel right now.. obviously .. i know i'm not telling you anything.. but you won't lose edge by putting on flys.. you will gain edge by the fact that its such a good hedge.. just a guess though.. watch it..

Cool Ill check it out. I'm open to anything and learned in trading that most of the time it's the stuff you never thought of that can be the best ideas.

actionzip54 · May 9, 2013

Quote from ogarbitrage:

Can you spoon feed this chart to a rookie a little more and tell me what you are looking at?

Obviously I understand that Gas Oil is the ICE/ European version of HO.

cdcaveman · May 9, 2013

Quote from actionzip54:

Also caveman pretty sure I was wrong on NG now and it looks bullish to neutral now. What strikes and month is your butterfly? How are you managing it?

managing is just holding on tight

i've got 1 butterfly on.. of course i wish the neutrality was lower then where it is..but thats life..

actionzip54 · May 9, 2013

Long the Jul-Sep13 Rbob at 581.

I hope that NG trade keeps going your way caveman.

cdcaveman · May 9, 2013

we shall see..

ogarbitrage · May 9, 2013

Quote from actionzip54:

Can you spoon feed this chart to a rookie a little more and tell me what you are looking at?

Obviously I understand that Gas Oil is the ICE/ European version of HO.

Sorry, this one is up to date. I did not realize the Gulf Coast curve (red, below) was so dated in the previous post (green).

This is just the forward curves for NWE gasoil as you noticed, with Gulf Coast and NY harbor ultra low sulfur diesel (ULSD). If you're going to trade a NY product, you need to watch the others because if the spreads get too large, physical product will start to move which should limit (in theory) backwardation in the front.