On the Wings of Gold: GF's GAMBLING & COMMODITIES Thread

[G0ldfinger]

Could you please explain a bit more about how you did this?

My online broker offers options on crude oil futures. So I searched the 200 versions or so on offer and picked one with a long maturity (Nov 2012 was the longest) and with the highest strike price ($200). The cost was 0.25 (or so) a piece. If oil goes to $210, you do the maths on the leverage. Obviously, I could "lose it all", but then I already wrote it off. If the option goes into the money in the end, the getting will be good indeed.

 

Let's hope Lindsey Williams is right.

(In fact, let's hope not, because I would have to hold many many more of these calls to make up for the loss through rising energy costs.)

[Perishabull]

My online broker offers options on crude oil futures. So I searched the 200 versions or so on offer and picked one with a long maturity (Nov 2012 was the longest) and with the highest strike price ($200). The cost was 0.25 (or so) a piece. If oil goes to $210, you do the maths on the leverage. Obviously, I could "lose it all", but then I already wrote it off. If the option goes into the money in the end, the getting will be good indeed.

 

Let's hope Lindsey Williams is right.

(In fact, let's hope not, because I would have to hold many many more of these calls to make up for the loss through rising energy costs.)

 

What broker is it you use? And these options; is one option an option on a single WTIC contract? Also the cost being 0.25, is that $25 / €25? WTIC futures contracts trade at $10 per 0.01 tick increment so if it hits $210 at maturity then congratulations, collect $10,000 and pass go.

 

EDIT - This reminds me of Bubble Pricker a long time ago mentioning buying 2012 WTIC futures contacts, I think he went ahead at $60 or so and of course the price rallied all the way to $147...nice

[G0ldfinger]

Is this a coincidence or a bad joke?

 

I think I should really stop giving information out for free.

 

[G0ldfinger]

What broker is it you use? And these options; is one option an option on a single WTIC contract? Also the cost being 0.25, is that $25 / €25? WTIC futures contracts trade at $10 per 0.01 tick increment so if it hits $210 at maturity then congratulations, collect $10,000 and pass go.

 

EDIT - This reminds me of Bubble Pricker a long time ago mentioning buying 2012 WTIC futures contacts, I think he went ahead at $60 or so and of course the price rallied all the way to $147...nice

Interesting how many questions this has sparked. I didn't think much about it. It seems plain vanilla call on the Dec. 2012 WTI Future. Here is the terms sheet. I obviously bought from the $200-strike tranch. For comparison, in 2008 this call traded at EUR 12.00 or so.

 

http://www.sg-zertifikate.de/uploads/tx_sg...2011-Jan-08.pdf

 

EDIT: So, it is 1:1 parity and the underlying price is per barrel. It's a pure paper bet. Cash settlement. So, they also make it easy for you in terms of terms.

[romans holiday]

Interesting how many questions this has sparked. I din't think much about it. It seems plain vanilla call on the Dec. WTI Future. Here is the terms sheet. I obviously bought from the $200-strike tranch. For comparison, in 2008 this call traded at EUR 12.00 or so.

 

http://www.sg-zertifikate.de/uploads/tx_sg...2011-Jan-08.pdf

I can't see you exercising those options even if the strike price was hit. Wouldn't you have to sell some of your bullion to exercise the option and buy oil?

 

I think your goldfingers would have to be prised off with a crowbar.

 

 

[G0ldfinger]

[G0ldfinger]

I can't see you exercising those options even if the strike price was hit. Wouldn't you have to sell some of your bullion to exercise the option and buy oil?

 

I think your goldfingers would have to be prised off with a crowbar.

Cash settlement, RH, cash settlement. Read the terms sheet. Although, I tried to prepare my wife psychologically that some trucks could show up in front of the house in two years time.

[romans holiday]

Cash settlement, RH, cash settlement. Read the terms sheet. Although, I tried to prepare my wife psychologically that some trucks could show up in front of the house in two years time.

Yes, but weren't you telling us before that you put all your spare cash into bullion... so wouldn't you have to sell some of that bullion in order to raise cash in order to exercise the option... once/ if the strike price is hit? And then might that be quite the dilemma.... gold or oil?

 

edit

[Carlton]

Yes, but weren't you telling us before that you put all your spare cash into bullion... so wouldn't you have to sell some of that bullion in order to raise cash in order to exercise the option... once/ if the strike price is hit? And then might that be quite the dilemma.... gold or oil?

 

edit

I think GOldfinger would simply sell the option for cash, or take the cash settlement at expiration, so there would be no exercise.

 

Cash settlement in EUR of an amount converted from USD into EUR (using the EUR/USD

Fixing Rate as fixed by the ECB (European Central Bank) one Business Day after the

Final Determination Date) which is equal to:

• Call = Max [(Underlying Fixing Price – Strike) * Parity ;0]

• Put = Max [(Strike Price – Underlying Fixing Price) * Parity ;0]

The Underlying Fixing Price is equal to the Fixing Price of the Underlying as taken at the

relevant Fixing Place on Final Determination Date.

[romans holiday]

I think GOldfinger would simply sell the option for cash, or take the cash settlement at expiration, so there would be no exercise.

Wot... gf would settle for paper...

[drbubb]

Could you please explain a bit more about how you did this?

So when Gold was at near $900, I was:

+ buying Jan.2011 $90 calls, and

+ selling Jan.2011 $100 calls

For about $3.40 debit.

 

I don't recall the exact prices, but I think I entered the trade when Gold was about $940 or so,

and maybe saw prices like this:

 

+ BUY: Jan.2011 GLD $ 90 calls at $10.00 x 10 cts = $10,000

+ SELL Jan.2011 GLD $100 calls at $ 6.60 x 10 cts = ($6,600)

=================== Net : $3.40 = Net cost $ 3,400

 

That is : $3.40 debit per contract: $340 x 10 = $3,400, and you "control": 1,000 share = 100 oz.

 

TODAY, this is worth maybe:

+ BUY: Jan.2011 GLD $ 90 calls at $xxx ??

+ SELL Jan.2011 GLD $100 calls at $ xx

=================== Net : $xxx

 

(Why don't you work it out, and I will tell you if you are correct.)

[drbubb]

Is this a coincidence or a bad joke?

I bet you will see that rise get faded soon...

[G0ldfinger]

I bet you will see that rise get faded soon...

I think I am going to buy more...

[drbubb]

I think I am going to buy more...

You might want to wait until next week.

Prices moves around Thanksgiving often get "faded" I have heard.

Though that has more to do with US equity markets, rather than Oil.

[G0ldfinger]

You might want to wait until next week.

Prices moves around Thanksgiving often get "faded" I have heard.

Though that has more to do with US equity markets, rather than Oil.

You might be right, but I bought more anyway since the price is close to the all-time low for this call and who knows what will blow up in Korea over the weekend. For now I am done with oil.

 

Next thing I will look into is Uranium. I've found related certificates/funds, but plain vanilla calls seem to be more difficult to find. I'll post more once I have found the time to do more research.

[cranberryDog46]

So when Gold was at near $900, I was:

+ buying Jan.2011 $90 calls, and

+ selling Jan.2011 $100 calls

For about $3.40 debit.

 

I don't recall the exact prices, but I think I entered the trade when Gold was about $940 or so,

and maybe saw prices like this:

 

+ BUY: Jan.2011 GLD $ 90 calls at $10.00 x 10 cts = $10,000

+ SELL Jan.2011 GLD $100 calls at $ 6.60 x 10 cts = ($6,600)

=================== Net : $3.40 = Net cost $ 3,400

 

That is : $3.40 debit per contract: $340 x 10 = $3,400, and you "control": 1,000 share = 100 oz.

 

TODAY, this is worth maybe:

+ BUY: Jan.2011 GLD $ 90 calls at $xxx ??

+ SELL Jan.2011 GLD $100 calls at $ xx

=================== Net : $xxx

 

(Why don't you work it out, and I will tell you if you are correct.)

 

 

I'm sorry I don't understand what it means to buy GLD $90 calls at $10.00 x 10 cts = $10,000

 

I'm guessing you're betting on the price of GLD rising and that the option will expire in Jan 2011 so you will have to settle or possibly roll over.

 

Just don't understand the mechanics of the bet.

[cranberryDog46]

So when Gold was at near $900, I was:

+ buying Jan.2011 $90 calls, and

+ selling Jan.2011 $100 calls

For about $3.40 debit.

 

I don't recall the exact prices, but I think I entered the trade when Gold was about $940 or so,

and maybe saw prices like this:

 

+ BUY: Jan.2011 GLD $ 90 calls at $10.00 x 10 cts = $10,000

+ SELL Jan.2011 GLD $100 calls at $ 6.60 x 10 cts = ($6,600)

=================== Net : $3.40 = Net cost $ 3,400

 

That is : $3.40 debit per contract: $340 x 10 = $3,400, and you "control": 1,000 share = 100 oz.

 

TODAY, this is worth maybe:

+ BUY: Jan.2011 GLD $ 90 calls at $xxx ??

+ SELL Jan.2011 GLD $100 calls at $ xx

=================== Net : $xxx

 

(Why don't you work it out, and I will tell you if you are correct.)

 

 

Don't understand why

 

+ BUY: Jan.2011 GLD $ 90 calls at $10.00 x 10 cts = $10,000

 

shouldn't it be

 

+ BUY: Jan.2011 GLD $ 90 calls at $10.00 x 10 cts = $9,000 ??????

 

Also don't understand how the $90 price relates to the price of Gold $90 per what ?????

[Perishabull]

Don't understand why

 

+ BUY: Jan.2011 GLD $ 90 calls at $10.00 x 10 cts = $10,000

 

shouldn't it be

 

+ BUY: Jan.2011 GLD $ 90 calls at $10.00 x 10 cts = $9,000 ??????

 

Also don't understand how the $90 price relates to the price of Gold $90 per what ?????

 

GLD is the gold ETF, it trades at roughly 10% of the price of gold. There is a good explanation of bull call spreads here;

http://www.optionetics.com/education/bulli...all.asp

 

Also ThinkorSwim have regular webinars explaining different strategies, go here for some education on spreads - <a href="http://mediaserver.thinkorswim.com/demos/2008/TOSDemoPlayer.html?vidSource=/transcripts/2009/20090826.swf" target="_blank">http://mediaserver.thinkorswim.com/demos/2...09/20090826.swf

 

 

ThinkorSwim have loads of archived material, for this go here -https://www.thinkorswim.com/tos/displayPage...playFormat=hide

 

and scroll down

[cranberryDog46]

GLD is the gold ETF, it trades at roughly 10% of the price of gold. There is a good explanation of bull call spreads here;

http://www.optionetics.com/education/bulli...all.asp

 

Also ThinkorSwim have regular webinars explaining different strategies, go here for some education on spreads - <a href="http://mediaserver.thinkorswim.com/demos/2008/TOSDemoPlayer.html?vidSource=/transcripts/2009/20090826.swf" target="_blank">http://mediaserver.thinkorswim.com/demos/2...09/20090826.swf

 

 

ThinkorSwim have loads of archived material, for this go here -https://www.thinkorswim.com/tos/displayPage...playFormat=hide

 

and scroll down

 

 

thanks PB

[G0ldfinger]

[wikileaks related] Goldman Sachs? Bank of America? Citi?

 

Looking forward to this coming out, depending on the nature it could rock the financial sector. Maybe get some puts on IYF in January...

Interesting idea. Need to check whether my broker sells such.

 

I had no time yet to do more Uranium research. I even wonder whether I should get more of these oil calls.

[Perishabull]

Interesting idea. Need to check whether my broker sells such.

 

I had no time yet to do more Uranium research. I even wonder whether I should get more of these oil calls.

 

If I were you I would be sure you know exactly what you are buying eg I don't think 1 of your warrants equals 1 futures contract

 

Checking the SG warrants website 1 of their Brent warrants is equivalent to 1/10th of a barrel of Brent...

 

That's an issue with warrants versus options - warrants are non-standard in the sense that 1 warrant is not equivalent to a set amount of the underlying security whereas options are standardised.

[crushtherents]

its a nice idea gf. i like the way you have presented it. i might have a go myself as a hedge. i have my FTB money in sterling. i can see i should have bought gold when you were on HPC.

 

even a fool...

[G0ldfinger]

If I were you I would be sure you know exactly what you are buying eg I don't think 1 of your warrants equals 1 futures contract

...

I think this terms sheet is pretty unambiguous. The definitions are not relative to a certain size of contract but to the "Underlying Fixing Price" which apparently is per barrel. If you can point out flaws, I am happy to hear them.

 

http://www.sg-zertifikate.de/uploads/tx_sg...2011-Jan-08.pdf

[G0ldfinger]

Now you know what to short.

 

http://www.bloomberg.com/news/2010-11-30/w...-executive.html

WikiLeaks Says It Holds Documents From Bank of America Executive

...

WikiLeaks founder Julian Assange, who told Forbes magazine that he’ll release documents from a U.S. bank next year, said in 2009 that his group had a hard drive from a Bank of America Corp. executive.

[G0ldfinger]

Thats enough for me! How do I have a gamble and short BoA?

Before I even knew these latest news, I tried to find BoA puts through my broker this morning (since I had a suspicion...). Guess what? No such thing. I guess there is a reason why they don't want to sell them to me.