Long july 12 Gasoline / Short July 12 Heating oil

TraDaToR

TraDaToR

Enter around now. Hold until may/June next year.

It seems quite reliable historically but also lost a lot in 2008. I am scared to trade intercommodity spreads in energy because of the size of P§Ls, especially when holding for 6 months.

What do you think about this spread? Are the fundamental conditions usual this year? Any reason not to trade it?

Thanks a lot.:)
 
Well, like all futures spreads with an exchange-recognized SPAN performance bond margin offset credit, it is ridiculously cheap to carry overnight. This is more for the ClearPort Swaps, but you get the point:

NYM
PETROLEUM CRACKS AND SPREADS
RBOB GASOLINE VS. HEATING OIL SWAP FUTURES
RH
1 Side B
1 Side A
Dates 10/2011 12/2012
Initial Performance Bond 770 USD
Maintenance 700 USD

The issue is that from the October 06 highs to the October 28 lows, you have a trading range worth $7,115. In other words, since you are considering timing a very volatile market you will surely be posting maintenance margin on it very quickly.

There are many hundreds and even thousands of better behaved and better modeling spread combinations in the energy universe than that beast IMO.

If are insistent on that thing, I would suggest buying ATM RBOB N2 Calls, and buying ATM HO N2 Puts. Expensive with alot of slippage, but at least you can sleep at night.
 
OK thanks Bone. I have a lot of "unused" money on my account so margins are not a problem. I will think about possible option positions to limit risk. I am also thinking about anticipating an early exit if the energy complex is getting too volatile( this trade would simply be a gamble in a 2008-like market ).
 
Wow at this spread, the energy space has become a giant clusterfuck with the unwinding of Brent/WTI and flip in term structure.

I suspect MF (directly or indirectly) played a big role in setting off some of these liquidations the last two weeks. Nobody even gave a shit that Keystone XL was delayed.
 
This spread is shaping well now after the initial heat. Low was 1-2 week after my supposed entry date. Of course I didn't take it...LOL:(
 
Quote from TraDaToR:

Enter around now. Hold until may/June next year.

It seems quite reliable historically but also lost a lot in 2008. I am scared to trade intercommodity spreads in energy because of the size of P§Ls, especially when holding for 6 months.

What do you think about this spread? Are the fundamental conditions usual this year? Any reason not to trade it?

Thanks a lot.:)
More...
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TradeDa T;
A few trend comments on gasoline;
sounds like your trend analysis/ July gasoline seasonals are right.

Its an Uptrend then[enrty], uptrend now most time frames.
Actually unleaded cash markets are down today, not that 1 red robin makes a spring.LOL
:D

And while buy volume , buy price is nicely uptrending;
March/gasoline/volume month contract looks very,VERY, extended.Sure it can get more extended....

:cool: Parabolic time price says sell on monthly[MARCH contract];
$3.00 & $3.58 area is all time high, all time resistance/10 years.


July gasoline[2012]weekly is still a buy on parabolic/time price on 3 year weekly; but that contract is up 5 weeks in a row...
$3.00 area, $3.07 has downspiked parabolic stop & reverse to to $2.75 area. Not a prediction.:cool:

[I like to record the spread with volume month gasoline;
& compare BP,Shell, independents, EXXON Walmart... /cash & credit price.This doesnt affect your spread]

Cheap money, cheap margin, thats fine;
it helps panic selling.Theyre selling UGA also..................:cool:
 
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