The word "heat" is an understatement in this one, technically and fundamentally. Quite frankly don't recall a worst call in ET, the fade would had been the ultimate long, hard, fast and furious.
RM's occasional market calls...
- Thread starter Rearden Metal
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The word "heat" is an understatement in this one, technically and fundamentally. Quite frankly don't recall a worst call in ET, the fade would had been the ultimate long, hard, fast and furious.
Yeah...It's quite weird actually...RM's record is good enough to tolerate a few bad calls... But it's like he wants to be 100% right.
I just hope he didn't lose too much on this one.
The thing is DGAZ is absolutely guaranteed to fall below his original entry of $17, its just a question of how high will it go first.
Lets say worst case natural gas hits $1.5, that would another 20% decline from current levels, I think that would put DGAZ around 50ish. I'd be shorting into that panic spike high. Rearden is fine as long as he sized properly.
Lets say worst case natural gas hits $1.5, that would another 20% decline from current levels, I think that would put DGAZ around 50ish. I'd be shorting into that panic spike high. Rearden is fine as long as he sized properly.
In the meantime, it just made a new 52 high and it has no options to lock in risk to play the long side in NG, in 2012 it got to 125+.
This trade is an abomination no matter how you look at it, let's face it, the call was to go long and fade the OP and it would had been heatless, a perpect trade, the opposite, which is what happened, the absolutely worst, a nightmare.
Again good luck to those in pain, but this one is looking extremely ugly no matter the outcome.
Its probably better to use UNG instead of DGAZ to bottom pick this. Yes DGAZ will go to $0 one day, the question is, will it make you insolvent before it does? With UNG, your risk is limited to the downside. In fact, unless the world will stop using natural gas entirely, the risk is limited quite a bit before the zero bound
RM is already roughly 50% out of the money on this dumpster fire. I don't care what size he has on (he already doubled down at 19.70), if this hits 50 it's a widow maker.
Hoping he already covered and is off licking his wounds with beers and strippers.
LOL. That's really ridiculous to say. You have no idea what size he has on. I would think this is quite difficult to borrow to short, so he may not even have that much size on it. And the fact that he has stated in his first post that he considered doubling and tripling down, that already showed he has considered his position size to scale in.
1- DGAZ isn't "quite difficult to borrow". It's free to short at my BD.
2- saying that you are ready to double and triple down is easy...before the security rips 50% against you in a week and a half.
3- The fact that our RM doubled down at 19.70 (the ETF traded 29 this morning) shows he wasn't expecting anywhere near this type of extreme move.
4- a 50% move against you is an awful trade regardless of how this turns out as I'm sure RM would be the first to admit, so let's not sugar coat it.
Of course the timing is off this trade, but I think everyone can agree that given enough time, natural gas price will rise back to normal levels.
Either gas producers will go broke, and supplies decreases. Or weather gets cooler, and demand rises. Right now, we are in the twilight zone between those 2 scenarios. I think by mid January, it'll be much better.
Either gas producers will go broke, and supplies decreases. Or weather gets cooler, and demand rises. Right now, we are in the twilight zone between those 2 scenarios. I think by mid January, it'll be much better.
+1, I cut 15 or 20% of my positions so far. BTW short DGAZ maintenance margin is around 150% right now on a pm account with IB, which makes this trade even more unpalatable, but with reg T it's less than 100%. Weird.