I think I'll just roll it over to the next month. I guess that is how it's normally done. How long before the last trading day do people typically wait to roll over?
How do you trade Brent oil futures longterm?
- Thread starter Sequoia1321
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I think I'll just roll it over to the next month. I guess that is how it's normally done. How long before the last trading day do people typically wait to roll over?
Again, “that depends on the circumstances”. I can’t manage your position for you.
Personally I would give myself at least a week before expiry because it is impossible to accurately model roll open interest bias these days. Remember the May contract would be my warning. I would also consider rolling every other month and not every month because you up need to take care not to fall into the same quagmire as the ETF USO.
Personally I would give myself at least a week before expiry because it is impossible to accurately model roll open interest bias these days. Remember the May contract would be my warning. I would also consider rolling every other month and not every month because you up need to take care not to fall into the same quagmire as the ETF USO.
Rolling every other month would mean to go with the October contract now, right? Your concern seems to be another crash in oil if I understand. But going with October contract has some disadvantages too, correct? Yes, USO was a terrible experience. Lost a lot of profit because of being in it. They're now under investigation I think from the Feds, and some class actions have already been announced against them. If I recall USO used to roll over 2 weeks before the deadline.
Yes.
Any other concerns you may have about NOT being in the front month are massively outweighed by the roll risk of being in the front month with less than a week left until first notice day.
Be conservative and don’t twist the dragon’s tail.
Can you elaborate more about what those risks are?
You need to learn to model markets for yourself if you’re going to take on this level of risk.
Also, if I go with say October, and there is a major war that brings oil prices up, are the later months like October going to be as affected by that news?
You need to learn to model markets for yourself if you’re going to take on this level of risk.
These days the volatality in brent oil is very high as second wave of corona virus is showing the worst results and also oil inventories have risen again against an expectation of their reduction.
So oil must be traded very carefully these days as prices are fluctuating every single day.
So oil must be traded very carefully these days as prices are fluctuating every single day.
The price to roll over was cheaper some days ago when the market was up, I think backwardation. Now it costs more to roll over. My broker has a 3 days before the final trade day requirement to roll over, but they said since this is cash settled I can roll over the last day. They also had an ability in their platform to place an order to try to roll over at a credit, or at break even, or at a specific amount of loss. Have such an order in place right now and will just wait until maybe the roll over cost gets improved.