Bubble Pricker

From looking at the NYMEX data it looks like the longest dated options is Dec 2010 (although as someone pointed out there maybe other ways of going further out). Let's say I buy an out-of-the-money Dec 2010 call option at a strike price of $120 and the call option price is $7.07

I wouldn't bother with options. They are alos not very liquid.

I reckon NOW is the opportunity of a lifteime, buy Dec 2012 oil under $60.

Anyway, Dec 2012 oil now at $130. I would like to pat myself on the back and say this thread was the call of the decade. Up $70 since my call, which is $70,000 on one contract.

I am not even bothering to verify or falsify the facts in this "article". The way it is written clearly points to a newsletter selling scam.

I could not resist researching anyway. Of course, it is an old story, reheated:

http://www.energybulletin.net/11707.html

Buried beneath the ground, in Colorado and Utah, are a trillion tons of oil shale. Throughout the 20th century, men have tried and tried again to unlock the energy contained in these rocks. To date, all efforts have failed. But every twenty or thirty years, when energy prices spike, a new attempt is mounted. The persistence is understandable: whoever unlocks this resource would capture a trillion dollar prize. But oil shale?s track record is not encouraging. The rocks are stubborn, an illusive bonanza, promising much, delivering little. Despite a century of trying and $10 billion in investment, oil shale currently provides an infinitesimal 0.0001 (or one ten-thousandth) of world energy. This paper explains why oil shale is so difficult to unlock, and why the ?rock that burns? may never provide more than one percent of U.S. energy.

Baron, here's my 2p:

• Clearly visible colour artifacts in both "planets" - nasty
  
• The logo looks far too much like outer space - get rid of one planet, add some earth contours on the planet beneath Global Ede Investors and change the planet under Green Energy Investors to a sun.
  
• Maybe you can even morph the background colour into green towards the right hand side.
  
• I would try to make to make the whole "incorporating Green Energy Investors" part smaller. It is too prominent
  

I also need a logo designed for Berlin Property Investments. Are you interested. You will be paid for your work product. But I need professional vector graphics, not the low-res artifacty stuff on here.

This asking for investment on the website has all sorts of legal connotations. The way it stands, it certainly breaks the law in almost every country in the civilised world.

I once again would recommend you to ask for donations to fund your research, rather than "investment".

There is no riskm from the - totally hypothetical - scenario described in the article as a return to long-term fixed contracts. It does not matter what happens in the future to future contract or whether they will be traded any more or not. Existing contracts are valid and binding, and the NYMEX exchnage is liable for its performance. Only if NYMEX goes out of business might the performance of the contract be in question.

my natgas position is my best portfolio performer by a large margin, making up for all the losses elsewhere. The May 07 contract is trading at $7.6. My May 2011 still has backwardation, but I expect that to converge to the near month price as we get closer to the date.

Gold has gained so much on friday ....... im anticipating a big fall in gold next week (so i went short prior to close on Friday).

Your first big loser today? Hope you are working stops.

Ive come the conclusion that i can make more through spread betting than i can through property speculating or working 9-5 for someone else, although right now i just dont have time to do it properly. Yesterday was good because i had no work - day off sick, indeed i am seriously considering quitting to focus on spread betting. Im waiting a while so i can show a consistant bet history with a minimum gain of £1000 a week.

Just be careful before you quit your job, because one can easily have a winning streak, and it seems like you have sussed it all out, and then you start having a losing streak. Also, what I have heard from many traders is that if you ahve a certain style of trading, it typically works for a while, and then it stops working and you start making losses. I think you need a consistent sustainable record over several years of making consistent profits from spread betting, before you should consider quitting your day job.

Also, I see the last contributor was from the UK and he had 15% of a distribution withheld, but had no further tax to pay due to his use of SIPP. As a resident of Ireland, is it safe to assume that I will be subject to the same 15% withholding, and then my own local rate of income tax (investment would not be via any retirement instrument etc).

The 15% Candian withholding tax applies to all non-Candian residents, so you should assume all income is paid less that 15% tax.

If you do not hold within a special tax wrapper in Ireland, the income will be subject to normal Irish income tax, if you are a resident of Ireland. You MAY be able to deduct the 15% already paid in Candian tax from your Irish tax bill. However, this will depend on the precise provisions in the Irish/Canadian double taxation Treaty, if such a treaty exists.

...will the higher oil price steadily lift oil shares or will dwindling oil Company capacity and reserves negate a large part of this benefit ?

eventually, yes, but this is a long way away. Major oil companies will continue to make increasing profits as the oil price goes up, although their profit growth will be limited by the rising cost of extraction. So a pure bet on oil prices will probably yield more. But then again, it is less risky to just buy oil shares like BP, receive the dividends every year.

I hold True Energy also. I paid slightly more at $7. I think this is an incredible bargain.

Rogers Says Oil Will Rise to $100 After `Correction'

Fine, let oil go to $100 and tar sand extration becomes viable. Meanwhile, I will collect my 38,000 profit.

Not nessecarily. OPEX are not very good at actually implementing production cuts. They talk a lot about them, but when it actually comes to cutting production, they tend to take a "not in my back yard" attitude, i.e. everybody wants the others to make the cuts.

Close last Friday was $60.94 on the Dec 2012 crude. I still believe this is a good opportunity. Of course, if there is another commodity sell-off, as Marc Faber predicts, the price could drop another $10 or so, who knows.

I think buying this contract has tremendous risk-reward: Oil cannot drop to zero, but let's assume worst case scenario it drops back to $12 where it once was (however unlikely that may be) and stays there until 2012. So at the current price of say $61, your maximum, extreme worst case scenario, loss on this trade is $49,000. A more realistic price that oild could drop back to by 2012 is $30. So your maximum loss is about $30,000. I believe dear Dr. you have risked more than that on far more speculative positions.

On the other extreme, if the Saudi Oil fields have a dramatic production drop over the next five years (because they have been overstating their reserves all along), all-out war breaks out in the Middle East, South America gets taken over by communist governments, and Russia descends into a mob-ruled society, then the oil price could go anywhere. More realistically, an oil price of $150 by 2012 does not seem that unrealistic, which would be a $89,000 profit.

Feb 07 crude has fallen by nearly $10 since Dec. 06. The Dec 2012 contract has hardly moved. The gap between the near term contract and the longest out contract has widened to $8. The market clearly does not believe that this drop is anything other than short term.

The long dated contracts have not fallen as much in the light of the recent drop in short term contracts to $52. Dec 2012 now trading at $59. It's a shame I have used up my ammunition. I reckon NOW is the opportunity of a lifteime, buy Dec 2012 oil under $60.

Crude now headed for $50. I have ridden along part of this slide with small shorts, but got out too early. In my view, this is fundamentally totally unjustfied. The trigger seems to have been inventory figures, not actually for crude oil, but for distillate products such as heating oil. What's happening now in my view is hedge funds bailing out. When this is over, it will be a great opportunity to get into oil / oil shares.

GOLD is stuck in contango, because of its monetary characteristic.

You can borrow and lend gold, at low interest rates, and it si easy to transport.

Hence, it will always be in contango (with only very rare and brief exceptions,

when it's short dated interest yield spikes.)

if you want me to say more about this, let me know

That makes sense, but why the backwardation on oil/gas? Does the market really believe that oil will not be higher than $62 by the end of 2012?

If spot oil continues to slide, the long-dated futures may get dragged down further.

They will, but I am not worried, because the short term price of oil is ultimately not relevant for this trade. What matters is whether oil will be above $62.40 in 2012.

It is interesting how the longer dated futures react in different markets:

1. Natural Gas: The long dated futures show slight backwardation, meaning it is cheaper to buy a long dated future than a short dated one. When the short term futures move, the long term futures hardly move at all. This seems naturally right, because why should short-term fluctuations in stocks and demand have any bearing on prices 5-6 years down the line?

2. Oil. The long dated futures show slight contango. The six year out contract typically trades about $4 above the near month. This ist still way below the real cost of carry and therefore effectively amounts to a real backwardation. Interestingly, the long dated futures do move more with the short term price of oil. For example, when I bought the Dec 2012 contract, it had just fallen nearly $3 as a result of the short term oil price falls. This does not really make sense. The recent short term falls are based on the warm weather in the US. Why whould the weather this month have anything to do whatsoever with the oil price in 2012? But the markets seem irrational here, so this is a buying opportunity.

3. Gold. None of the backwardation observed in oil or gas is present in gold futures. Long dated gold futures show a natural contango, increasing with the length of term of the contract, which is in line with the cost of carry. 2012 gold costs over $800.

I believe the initial margin is $3 (x1000) per contract, but this would increase if the price of the contract were to fall.

I used today's weakness and got filled at $62.40.

I have received my first monthly distributions from the trusts I bought in November. There is a 15% Canadian withholding tax applied to the distributions. I have no further tax to pay in the UK, as I hold in a SIPP.

I am bidding to buy PrimeWest (PWI) today.

Later: I bought Primewest and Fording Coal today.

The Dec 2012 has risen to $66, despite the front month contract remaining relatively flat overall in past couple of weeks. I am gutted I missed out on an opportunity to buy at $63.

Some more bad news for Canadian energy trusts:

http://www.globeinvestor.com/servlet/story...USTS16/GIStory/

I am pulling together a list of the trusts I have bought and the ones I am watching on http://www.advfn.com/cmn/fbb/thread.php3?id=13233280

Webmaster, can you please merge this thread with that one: http://www.greenenergyinvestors.com/index.php?showtopic=1044

It's a bit tedious jumping forth and back between the threads