USO

[Hemanth]

Dammy, what's the funda?
Does this recur every year?

On Fri, Feb 6, 2009 at 3:57 PM, Dammy <hid...@gmail.com> wrote:

buy on 15-17th .. whenever u have time to place order

sell on 24-26th .. again whenever u have time to place order :D

Charles M. Schulz  - "I love mankind; it's people I can't stand."

[Dammy]

since last 3-4 months everymonth during future expiry ... there is  agap between current omnth price and future month price ... with future month's proice being higher ...

 

epiry is usually around 20-22nd every month ... adn the gap tends to come down close to the expiry date ...

USO is a proxy stock for oil futures price

so buy on 15th and sell on 25th ..

[Hemanth]

That could be the case when Oil used to rise everyday till a few months ago.
With the current situation, wouldn't that be a gamble for a minimal profit expectation?

Lucille Ball  - "The secret of staying young is to live honestly, eat slowly, and lie about your age."

[Amar]

it always is a gamble ;)

[Hemanth]

Yeah. gamble for a minimal profit .. just wondering. Not sure thought.

Joe E. Lewis  - "I distrust camels, and anyone else who can go a week without a drink."

[Dammy]

oil has been around 35-45 since last 3 months re ...

i thiink it is a nice scenario ... let me try it and let you know this month

[siddhartha battina]

This is happening bec of the huge inventory levels everywhere...Nobody wants to take delivery on the expiry
date which is on 19th this month..This has been heppening since the last 2 months....there is absolute shortage of storage space as the perception is that the prices are very low and they have stacked up heavily... and one more reason is this so called contango ...the dec contract is trading around 55$/barrel and the current contract is at 40...so,if u buy it now and sell it in dec,u make a profit of 15$ when the stoarge cost is around7-8$ per barrel per year...

the trade in discussion has very high probability of giving u profits atleast this month as the diff between this month and the next month prices has just started a new downtrend...its at 6$ and may widen upto 9-10$ on the expiry day...u can take that trade around 17th-18th of this month...

one clarification needed is to how that USO accounts for the continuation in the future contracts???

[siddhartha battina]

ya,the easiest of trades :: use ur backyards to store some barrels....and sell the dec contract...

[Hemanth]

Siddhu,

Can you explain the following in detail?
 

the trade in discussion has very high probability of giving u profits atleast this month as the diff between this month and the next month prices has just started a new downtrend...its at 6$ and may widen upto 9-10$ on the expiry day...u can take that trade around 17th-18th of this month...

one clarification needed is to how that USO accounts for the continuation in the future contracts???

Bob Hope  - "I have a wonderful make-up crew. They're the same people restoring the Statue of Liberty."

[Hemanth]

Just found this article. Didn't get a chance to go through it in detail though.

http://www.indexuniverse.com/blog/5362-uso-oil-usl.html?Itemid=3

Bob Hope  - "I have a wonderful make-up crew. They're the same people restoring the Statue of Liberty."

[siddhartha battina]

the article sums it up well...

[Amar]

nice article ... only now i got to understand what u junta were talking about...

[Kalyan Rokkam]

he he interesting...Actually this is exactly my project
topic..contango effect in oil futures market and other commodities
markets. We are working on this. The inventory levels in oil are at
all time high and storage capacity in the oil market is not enough and
hence their is quite a bit of downward pressure on the current oil
spot.

And yeah that USO fund is actually a bummer i think. They keep rolling
their short-term futures and losing big time on roll yield.

[siddhartha battina]

Funds like USO will definitely underperform if there is a huge contango...

Just after the expiry,there might be a relief rally as the selling pressure and the rollover pressure wouldn't be there...so entering USL on the expiry day or a day before that and exiting after a few days should be profitable...

after very wild moves,crude is having a time correction rather than a price correction....so,expecting a sharp pull back isn't recommended...

S&P has good support around 845 and is moving towards 875...once 875 is broken,higher nos are possible...

[Charan Karne]

S&P 500 is at 835 now..

BTW, DTO is benefiting from the Contango effect. But, its too late to enter DTO unless someone thinks Oil is heading to 20s..

[Hemanth]

wow.. thats ultra short oil.. DTO at 200 now.

Garry Shandling  - "I'm dating a woman now who, evidently, is unaware of it."

[Amar]

interesting opinion on NYtimes regarding traders point of view and shareholders point of view in I-banks :D

http://www.nytimes.com/2009/02/11/opinion/11wilmott.html?ref=opinion

[Charan Karne]

Thats an interesting opinion indeed.

[Charan Karne]

Oil is up 12% and DTO is also up today.. Strange world we live in..

[Dammy]

right now .. OIL is up 10% and USO is down 0.5% ... strange too ...

 

I anyways plan to go ahead and do my trade in USO ..

most probably i'll buy it this mon/tue and sell it on 23-25th ...

[Dammy]

last time USO ended at $25.60

today i puta but trade for 40 shares at $25.15 

 

now USO trading at $23.55 .. 8% down :D

i might order 40 more shares tonight

want to sell them next week ...

[Charan Karne]

DTO is up 12% today and @ $242. New high everyday.

[siddhartha battina]

crude just now shot up 7% ...right on the expiry day...

[Dammy]

:D