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Guest Post: Option Bets On $100 Oil By Year-End Jump 10%
Submitted by John Bougearel of Structural Logic
Earlier Marla shared her views on peculiar option action and what the implication of this may be for the oil (and geopolitical) complex. We present some thoughts out of John Bougearel that takes a look at the argument from a more technical perspective.
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Thank you.
Latest Big4 Weekly Report finds
Crude Net Long on the Merc.
Euro Crude Options Short,
while American Crude Options
with larger open interest
net long.
JubileeProsperity.com
Bought a leap call on BP a few months back which has been appreciating nicely lately...
OT
Why can't we give homeowners in foreclosure a simultaneous closing option where, on the day they get foreclosed, they get the first right to repurchase the house back at current appraised value with a new mortgage, at perhaps 10% down?
Great point, we are rewarding everyone who fails nowadays, why not home buyers who bought in the bubble like idiots?
Because this is against every responsible lending policy.
You want to take someone who has proven they can't or won't pay off a loan, give them special treatment in the form of first right to purchase, reward them with a better rate, and all based on the same property that was supposedly a security for the first loan?
How about giving that person a kick in the ass and let the rest of us who do pay our bills get that lowered rate? Why would anyone in their right mind give another mortgage to a known defaulter? Does ANYONE believe in fiscal responsibility and consequences anymore?
Here's an idea....how about I agree to buy your car, drive it around and enjoy it, but when I don't pay, you have to let me be the first to buy the car again and you have to cut me a better deal? You wouldn't do this with your money, so why should the rest of us (in the form of governmental intervention in the loan process) be forced to do the same with deadbeats and their houses?
No thanks -- I'm a fan of letting business that overextend go Out of Business, and of letting loan defaulters sit in a shitty apartment for awhile until they learn where their financial over-leveraged point is and stay the hell away from it. It's called Fiscal Responsibility, and your idea is the opposite of responsibility.
In normal times I would agree with you 100%. We are not living in normal times. I give 1st fault to the banks for lending to that craziness. They should be the ones to eat the loss, not the tax payer. The banks should have known better, they are supposed to be the experts.
Look, it takes two to be stupid. Nobody rounded up prospective buyers and tortured their families until they signed. It was a whole lot of stupid. Blaming the banks for finding these morons to begin with is not the real issue.
The issue is that you can't fix stupid. There's a lot of crybaby reports on the TV about how the big bad mega bank was sneaky. Read the paperwork before you sign, and if its too complex to sign, don't. I am at a loss to see how the rest of the country needs to bail out morons at all. I thought we were a free market economy.
Today? In America? Are you f--king kidding me?
That would perfectly describe the hapy situation the US Govt. and Wall Street (your true rulers BTW) find themselves in. What's good for the goose is good for the gander.
Try telling THAT to the US Government. You certainly don't mean to have the USG go out of business now, do you? Because the USG DEFINES "overextended".
Ummm...NO. So you are a moron if you do (today in the USA). Stop paying and quit whining. Don't let the banks rob you anymore. The entire currency system is a big giant Ponzi scheme fraud!
What's the price of oil look like in gold or Euros? Isn't a lot of this commodity movement based on the dollar's recent decline? Late last year, when the skids were greased and everyone was sitting in the handbasket waiting for the final tip into hell, the dollar surged in value, and oil dropped into the 40s. Now, the dollar has been hammered and oil's up. So, how much of the price action is demand- or supply-driven, and how much of it is simply currency driven?
testing...
The $100 dollar bets are from the banks knowing full well that the government HAS TO launch QE2, devaluing the dollar even more and pushing up gold, oil and all other commodities - the only equities I am in are green, gold, uranium and minnow/ medium oil producers - 80% Australian.
WTIC currency mix http://tiny.cc/X3zoA
looks like US/UK screwed. Europe & Anglo commodity currencies not so bad. in the 1930s US oil imports dropped to 1/4 previous figures, this time 3 billion Asians guzzling. see Martin Armstrong "The Greatest Bullmarket in History" 17 vols, online.
$WTIC 38.2% retrace http://yfrog.com/6r1377p
INDU 50% retrace, 9999
Here we go again!
The $70 oil trade has been the benchmark for the dollar but that is now is jeopardy. Nymex crude closed over $78 yesterday, there is really no limit on the upside, if the price breaks $80, IMO. It would be a deleveraging event, accepted by the markets as such. Funds would seek to convert from 'money- like' liquidity to cash; oil futures being a way to launder this liquidity.
There is a lot of liquidity out there ...
The short version of what happens next can be found over @ James Hamilton's website.
http://www.econbrowser.com/archives/2009/04/oil_shocks_and_1.html
Personally, $70 a barrel is an economy killer, but the higher levels drive a stake through its heart.
$70? I was thinking the $40 to $50 range is more like what the "real" US economy is going to need in order to recover.
How long until Obama starts "leaking" a quarter-million barrels per unit of time from the SPR in an attempt to destroy the marginal price per bbl? (The specific unit of time is left as an exercise to the reader.)
Washington is ever closer to being raided by the discouraged unemployed, the newely unemployed, the part time employed and the disenchanted employed. The adminstration cannot afford to allow oil prices to sky rocket. This frog knows the temperature is rising.
Raided? These people are too busy cashing their 99 weeks of unemployment and eating the fat of social programs. They know not to bite the hand that feeds them.
An increasing oil price will prove to the masses that inflation is here, they tried it last year but the peasantry wasn't ready for it. Higher oil prices means higher CPI. The inflationary drums roll....
Washington is driven by the constant campaign to retain power (aka get re-elected.) The placid state of the US population seems to be waneing.
Given the apparent loss of control of oil and gold prices simultaneously along with T-Bond interest rates getting dangerously high (for the incumbebts and the housing industry), a true mess could be developing for the final stretch of the mid-term elections.
Would it be to the incumbents advantage to have an immediate market plunge driven by some event that shifts blame to regain control of oil and, hopefully gold, prices and control interest rates of treasuries for the short term then repeat the stock market rally of 2009?
Given modest notice, I'm sure Da Boyz could/have adjusted their portfolios.
yeah the Oil is skyrocketing. courtesy of Bubblenanke's idiotic policies.
my 'econometric' model says: watch for Cons Confidence for October to fall under 49 on Oct27th. unexpectedly, of course, just like for September.
Interesting. How's the demand for crude from the refineries doing these days? Anyone?
USO seems to be breaking out of a 9-month resistance at $40. Next week will be very interesting.
While the DEC. options activity provides fuel for thought those options could be against anything..OTC swap positions other strikes and mo.s, vs. long vol elsewhere who knows. It does make those particular strikes interesting particularly if they are near at expiry but the Dec 100 has been used the last couple years as a generic more liquid strike. It's just noise.
While the DEC. options activity provides fuel for thought those options could be against anything..OTC swap positions other strikes and mo.s, vs. long vol elsewhere who knows. It does make those particular strikes interesting particularly if they are near at expiry but the Dec 100 has been used the last couple years as a generic more liquid strike. It's just noise.
John, why are you still posting your technical analysis on this board? Didn't you say would would bet your bottom dollar that the markets would plunge till the mid of October? Of course, when it didn't happen you immediately posted maybe the plunge won't happen! So what about your three peaks and a housing dome pattern as a very good leading indicator? My gosh, is anybody still listening to you?
FT today
Options-driven rally likely if oil hits $80http://www.ft.com/cms/s/0/a3fd8eee-bcee-11de-a7ec-00144feab49a.html
And I reiterate what I said in a previous comment: This is the action of one guy with limitless pocket( and no it's not the Fed or GS). It's always been his strategy: buy lots of OTM options and then push the cash or futures
http://news.bbc.co.uk/2/hi/middle_east/8317919.stm
looks like they are going to have a war with Iran after all.