# duc's Commodity Trading Thread



## ducati916 (21 November 2018)

In part to keep everything in one thread, in part not to pollute others' threads with issues that pertain to trading, but not on topic for that thread.

So two current positions:

(a) Short Oil; and
(b) Long Gold.

I'll use the COT data to trade the positions. I'll not ignore the technicals, but will try to interpret them through the COT data.

As the COT data releases after market close on a Friday, positions can only be amended [long to short, or short to long] on the Monday. While this is a delay, it does not seem to make too much of a difference overall. Sometimes turning points in a trend, if a 'V', you can get caught out somewhat, but otherwise the delay makes little difference.

This then clearly will not be a day-trading undertaking. I like to look at the market everyday, but only for about 15mins nowadays. This system fits nicely into that timeframe.

I'll make note of fundamentals, if only to demonstrate that they are open to [faulty] interpretation or bias, every now and then though the stars will align and move together.

jog on
duc


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## ducati916 (21 November 2018)

So, oil. 

The COT came out Friday and massively increased the selling pressure. This meant a flip-flop again on [Monday US time], as I had convinced myself 'long' was the correct position based on slowed selling [previous COT], technical set-up and even the fundamentals.

Today, oil trading lower. 

Gold COT moved from selling to buying, hence the long position in gold opened Monday US time.

jog on
duc


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## tech/a (21 November 2018)

Great Duc 
I hope to learn something


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## ducati916 (22 November 2018)

tech/a said:


> Great Duc
> I hope to learn something




tech,

If you don't use, or haven't used COT data, then there might be something in there for you, particularly for your AI project. From a data point of view there is plenty of historical data and it is largely unused as far as I am aware. That could definitely have potential.

Talking broadly now, the rules of entry/exit [flip-flops] could easily be amended to close all positions Friday and re-enter Monday after the COT numbers are released. I haven't done any extensive analysis of whether this would be beneficial or not. My heuristic on this is that it would all pan out in the wash. Some weeks it would work well, others it would work badly. I'll keep notes going forward, but it will become clear over time anyway. I'll look at about 1 year going back in time this week to see if there is anything worth pursuing.

The basic rationale of using the COT data in commodities is that the Commercials play a far larger [controlling] role in the price direction of commodity 'x'. By following their buying/selling lead, you share in their edge. They have very close relationships with suppliers and producers and therefore have a much clearer insight into the market in question.

As indicated in the previous post one issue is in 'V' shaped bottoms. Where a reversal of trend is very volatile, the data can lag and you can be wrongly positioned. Obviously a price chart will highlight a 'V' bottom, but again, a little after the fact. I don't have a good answer atm for this, well actually I do, but it is nothing to do with COT data or price data, it is actually how you structure the position via the instruments that you employ.

Re. 'V' bottoms using just COT/chart price data, it will have to be a seat of the pants call. Probably what will happen is that some will be called correctly, others will be called wrongly.

jog on
duc


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## ducati916 (22 November 2018)

With the size and rate of decline in oil, a bounce higher has to be on the cards at some point. Obviously that is a bias and that bias has been wrong for about 1 month and counting.

However;

_*Hedge funds eliminate bullish bets.*_ The bull market has now fully unwound after hedge funds and other money managers have sold off all the bullish positions they had accumulated since the second half of 2017, according to Reuters. The last seven weeks has seen the largest liquidation of long positions since 2013. Long positions are now at their lowest level since January 2016 – a period of time that coincided with the very bottom of the oil market cycle. Fund managers now have a roughly neutral position towards the market.

_*Energy companies lost $1 trillion in oil price slide.*_ The global oil and gas sector has lost $1 trillion in value over a 40-day period since October after crude prices fell by about $20 per barrel. U.S.-listed companies in the S&P 500 shed $240 billion. ExxonMobil (NYSE: XOM), for instance, lost $35 billion in value. Some analysts are warning that OPEC+ will need to cut output to balance the market. “If they don’t cut, I guarantee you it’s going to be 2014 all over again,” Mike Bradley, managing director at the energy investment firm Tudor, Pickering, Holt & Co., told the Houston Chronicle.

_*Natural gas volatility bankrupts trader. *_Commodity-trading firm OptionSellers.com hasfallen apart because of the violent swings in oil and natural gas prices. The firm apparently suffered a “catastrophic loss” by wrong-way bets on prices. Oil fell by 7 percent on November 13 and natural gas spiked by 18 percent on November 14. Individual investors, which apparently had to have made a minimum investment of $250,000, are set to lose their money. 

jog on
duc


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## tech/a (22 November 2018)

Never used it Duc but I would like to do some work on it.
Gives a macro look.
Lot of money to be made and lost by being on the wrong or right side of
The market your trading.

So are you still long gold short oil?
Care to expand more on your use of 
COT


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## peter2 (22 November 2018)

I'm a past subscriber to Stephen Briese's reports on the COT data. Stephen developed his own indicators based on the COT data to aid his interpretation of what's happening and what's likely to happen with prices. Stephen got it right sometimes and at other times didn't. Sometimes his timing was too early and at others it was too late. He combined his COT indicators with a moving average system and was able to demonstrate that his system could generate profits in the longer term (years). 

I couldn't implement Steve's system because the size of the initial risk in many commodities were too high for my account balance. 

Commercials may think they're "controlling " prices because they're the big players. The economic forces of supply and demand remain the biggest controllers. 

_Re_: the downfall of Optionsellers; While they could pick up pennies in front of a steam roller for many years and broadcast their great success, the steam roller only has to get them once to flatten them.


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## ducati916 (23 November 2018)

tech/a said:


> Never used it Duc but I would like to do some work on it.
> Gives a macro look.
> Lot of money to be made and lost by being on the wrong or right side of
> The market your trading.
> ...




So I'm SHORT oil
LONG gold.

The gold trade is more comfortable for me as it sort of aligns with my technical take. The oil trade is the one that seems [subjectively] to have run too far. However the COT numbers last week were massive so I flip-flopped and [so far] it has worked out.

As peter refers to Stephen Briese, I have also read his book [have it on the shelf] and I didn't do much with it for years as I jumped professions, necessitating a stint back at Uni. However now that I'm trading again, I dusted it off and applied the logic to my own simplified system for the COT.

So each week a COT report is released for a huge number of futures contracts. Oil and gold are the two that interest me.

The reports provide net positions for three main groups: (i) commercials (ii) funds (iii) speculators. I discount (iii) as they are too small to worry about. I net out both (i) and (ii).

I then compare the net of the current week to the net of the last week and net that total, which provides a change of position. I'll also calculate it as a %. Small changes in a trend [tend] to mean nothing [continuation of trend] and so I do nothing. A bigger [significant] change can and usually does, indicate a change in the trend, or just to pay much closer attention. This is why I let the position run through the w/e and wait for some price confirmation/rejection on the Monday [US time].

So as an example: Oil

30 Oct Report: Net (-77,218)

6 Nov Report Net: (-74,285) This is where we had a pause and I [thought erroneously] that this was going to be a 'change' in trend, flip-flopped from short to long.

13 Nov Report Net: (-92,843) which necessitated another flip-flop [back] to the short side.

What I should have done was sit and wait through the w/e for the numbers and adjust [if needed] on the Monday. But I had [through the fundamentals, technicals] convinced myself otherwise, so after almost 20yrs of trading I still make rookie errors.

Gold on the other hand:

30 Oct Report Net: (-25,927)
6 Nov Report Net (-36,891)
13 Nov Report Net +10,034

Gold was a far easier signal to see. This week's report will be interesting as to whether Gold builds on that, as will the Oil report.

Therefore my use of the COT is not particularly nuanced, pretty basic really.

jog on
duc


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## ducati916 (23 November 2018)

peter2 said:


> I'm a past subscriber to Stephen Briese's reports on the COT data. Stephen developed his own indicators based on the COT data to aid his interpretation of what's happening and what's likely to happen with prices. Stephen got it right sometimes and at other times didn't. Sometimes his timing was too early and at others it was too late. He combined his COT indicators with a moving average system and was able to demonstrate that his system could generate profits in the longer term (years).
> 
> I couldn't implement Steve's system because the size of the initial risk in many commodities were too high for my account balance.
> 
> ...




I am aware of Mr Briese. As I said to tech/a, I have had his book for many years and didn't really do too much with it for a few years. I find some of his methods unduly complicated and therefore simplified them for my own use.

I agree re. early. No methodology will be 100%. If it were, well.....

Re. economic forces. Again, yes I agree, however those economic forces take time to manifest. In the short term, buying and selling [in error] continue. The 'commercials' sit between the origin of supply, miners/drillers/farmers and the producers, petrol, coffee, etc. As such, they do in point of fact represent those macro economic forces, on a day-to-day basis. Such is their influence via these two camps, that their buying/selling is the dominant maker of market prices. For us small-fry, following their lead makes a lot of sense.

There have been many examples of Hedge Fund blow-ups and there will continue to be moving forward I'm sure.

jog on
duc


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## ducati916 (23 November 2018)

So here are examples of: (i) Mr Briese's charts and (ii) a COT report


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## ducati916 (24 November 2018)

So I grabbed this from the 'oil' thread.

Clearly a prescient call on oil. So I'll accept the first half as we are nearly at $50/barrel. The second half of the call is a return to $100/barrel within 6 mths.




The new COT numbers will be out after the market close. I'll update the numbers and re-position or sit tight based on those numbers.

My only decision is whether I close out and take profits.....or sit tight and re-position Monday. Not sure atm.

jog on
duc


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## ducati916 (24 November 2018)

I'll sit tight on the positions.

I think oil has come too far, too fast and a bounce is coming. However, that being said my 'subjective' positions have all been wrong to date. So I'll stick with the plan and flip-flop if necessary come Monday.

After all, why not $40/barrel

jog on
duc


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## ducati916 (24 November 2018)

The longer picture.

jog on
duc


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## tech/a (24 November 2018)

Duc

It appears you used to be indecisive 
But now you not so sure!

Monday
You’ve decided to sit
And flip flop if necessary.


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## Skate (24 November 2018)

tech/a said:


> Duc
> 
> It appears you used to be indecisive
> But now you not so sure!
> ...




Its the 50/50 -- 80 rule..

Meaning when confronted with a 50/50 scenario 

80% of the time your choice will be wrong...

Skate.


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## Triple B (24 November 2018)

Good stuff Duc.
So The report comes out on a tuesday reporting the  positions as of the previous Friday,Correct?
Was just marking a chart using the dates above and noticed the dates were not the fridays.They were tuesdays. So I need to mark back 2 trading  days from the published dates to align the report with the friday close. COT is interesting ,have looked at it before but forgot about it . Thanks for the reminder post!
Looks very interesting related to a 4hr chart.(Gold) Will mark one up and post if you like this arvo after work.


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## ducati916 (24 November 2018)

tech/a said:


> Duc
> 
> It appears you used to be indecisive
> But now you not so sure!
> ...





Correct. I'll flip-flop on Monday if the current COT report indicates a change in position is required. If not, then obviously I need do nothing on Monday [US time].

jog on
duc


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## ducati916 (24 November 2018)

Skate said:


> Its the 50/50 -- 80 rule..
> 
> Meaning when confronted with a 50/50 scenario
> 
> ...





Well I'm closer to the 100% currently.

jog on
duc


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## ducati916 (24 November 2018)

Triple B said:


> Good stuff Duc.
> So The report comes out on a tuesday reporting the  positions as of the previous Friday,Correct?
> Was just marking a chart using the dates above and noticed the dates were not the fridays.They were tuesdays. So I need to mark back 2 trading  days from the published dates to align the report with the friday close. COT is interesting ,have looked at it before but forgot about it . Thanks for the reminder post!
> Looks very interesting related to a 4hr chart.(Gold) Will mark one up and post if you like this arvo after work.





The report deals with the positions as of Tuesday [US time]. The report is published Saturday [US time]. So there is a tremendous lag, but it does not seem for the most part to invalidate the signal.

On a 'V' reversal with high volatility, it can lag a bit. C'est la vie.

jog on
duc


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## Triple B (24 November 2018)

Hi Duc. Have finished my chart . would you prefer I posted on gold digger thread ?


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## ducati916 (25 November 2018)

Triple B said:


> Hi Duc. Have finished my chart . would you prefer I posted on gold digger thread ?





If you are happy to put it here, I am happy for you to put it here. The idea is to make money. Pure and simple.

jog on
duc


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## ducati916 (25 November 2018)

Here is the Gold COT chart: 



jog on
duc


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## Triple B (25 November 2018)

OK thanks.
Im sure you are aware that there is many ways to use the COT data.
I have used it in a different way to you.
I have left out the Producers and swap this time and have correlated the data for the Speculators.
ie Money Manager , Other reportables , Non reportables  and a number I called Speculator Net Positions.
As the chart is now Saved I can easily add the Producers net as well and Might do that tonight to see what the results look like.
As I am a shorter term trader (for now) I wanted to see what the speculators were up to on an intra day basis , so I marked the last 10 reports on a 4hr Chart
I used the CMX futures only data GC
This is spot Gold
The Legend :
 Blue Arrows are the report Date ie Tuesday Close candle.
Yellow Arrows are the Publishing Date close candle ( 3:30pm EST Fridays according to the CFTC site?)
MM = Money manager net short or long - = net short + = net long
OR= Other reportables  net short ,long
NR = Non reportables  net short or long
SN= Speculator net short or long
Dates are in Australian format D/M/Y
also atatched is a 4hr chart wide view for the bigger picture . Has report days marked
Will also do similar chart for a period when gold was in a strong bullish trend and another for bearish trend when time allows.
Its a bit cluttered but manageble.
Have not checked over the data for errors yet as got tired. about 4 hrs work here!




Notice the MM net short on 9/10/18 -109000 then the next week 16/10/15  -49382
This was the week the Stock markets had the large "correction"
anyway you may find it interesting , I did


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## ducati916 (26 November 2018)

Triple B

I may be missing the point here. Given that the data is historical, how would you use that trading intra-day going forward?

Is there some rule that you can create from the data that informs the position that you take?

Not sure why the line through is happening [ignore it].

jog on
duc


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## ducati916 (26 November 2018)

The current report seems to be held up due to the Thanksgiving holiday.

jog on
duc


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## tech/a (26 November 2018)

ducati916 said:


> Triple B
> 
> I may be missing the point here. Given that the data is historical, how would you use that trading intra-day going forward?
> 
> ...




Meant to comment yesterday 
I know you spent a lot of time on this Triple B 
But it’s a chart marked up in hindsite. It has no value that I can see to
The right side of the page.
Like all analysis it needs to be helpful going forward
Perhaps you can fill in the gap?


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## Triple B (26 November 2018)

At work on ph. I'm trying to see a market reaction on day report is published and if there is a common pattern.who was on right side of trade at report date and how the big money react to trend lines support and resistance if at all.also knowing if large mm is all short for coming week and market hits support could be strong long if they need to cover and vice versa


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## Smurf1976 (26 November 2018)

ducati916 said:


> I think oil has come too far, too fast and a bounce is coming.



Looking at past major declines in oil, particularly 2008 and 2014, it could be argued that this one is only just getting started and has a lot further to go. 

Those previous two both resulted in a fall of around 70% peak to bottom. If that occurs this time then we're looking at prices in the low $20's.


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## ducati916 (26 November 2018)

Smurf1976 said:


> Looking at past major declines in oil, particularly 2008 and 2014, it could be argued that this one is only just getting started and has a lot further to go.
> 
> Those previous two both resulted in a fall of around 70% peak to bottom. If that occurs this time then we're looking at prices in the low $20's.





On a % basis that is certainly true and of course possible. 2008 was straight down. 2014 at least gave a short lived bounce.

It would seem and it has been stated, that the shale producers are profitable down to the $40/barrel level. If that is so, you would expect the supply to come off around that $40/mark. Against that argument it would seem that historically [private oil producers], this has never been the case, they pump and pump. OPEC still seems to be dithering, so atm, $40/oil looks [quite] likely and if OPEC/Shale does not take off supply, as you say, $20/barrel might be on the cards.

There are still not COT numbers from last week published yet.

jog on
duc


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## ducati916 (26 November 2018)

Triple B said:


> At work on ph. I'm trying to see a market reaction on day report is published and if there is a common pattern.who was on right side of trade at report date and how the big money react to trend lines support and resistance if at all.also knowing if large mm is all short for coming week and market hits support could be strong long if they need to cover and vice versa




Gold is an altogether different beast to Oil. The rule for oil does not translate to gold. With gold it is better to close the trade on the Friday and re-establish a position on the Monday, but even then it a tricky [subjective] entry/exit.

So COT report 30 Oct available on 3 Nov. Tradeable as of 5 Nov. (this corresponds to bar 2). Open SHORT on Monday, close on Friday [profit]

COT report 6 Nov available 10 Nov. Tradeable as of 12 Nov. Open SHORT on Monday close on Friday [Loss]

COT report 13 Nov. Tradeable as of 19 Nov. Open LONG on Monday close on Friday [profit].




jog on
duc


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## ducati916 (26 November 2018)

All is not however lost. As it can be seen from this chart, the previous chart refers to a potential transition point in trend.




So the bigger question is the validity of the signals from June through September. Also this is where you would probably add in a technical analysis and see that support was the higher probability play at the $112/level.

I personally, seeing the failures at $114 to go lower and the previous strong support at the $112/level would be wary of a SHORT signal at these levels.

jog on
duc


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## notting (26 November 2018)

This is how I have been observing oil for the last couple of years.
I wasn't surprised that the Saudis were able to holt the rise but wasn't quite expecting it to tank like it did. Though looking at what it did from July 2014 I should not have been.
The Saudis have already indicated they are going to bring it back up once it fell to 56 ish. Other analysts have also said they'd prefer to be long than short at this point.
Oil almost always overshoots as it isl like turning a big tanker around, I'm going to be playing it with a negative bias till it's in the low 40s, even though I believe it will not be allowed to stay below 60 for too long, it seems to me that that is the line in the sand.
Don't believe for a minute that Putin is not phased by the current price as he is pretending. They will be freaking out as much as anyone!
It was allowed to bottom for 2 years from the 2014 plunge, probably won't be held there for that long this time.


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## Smurf1976 (27 November 2018)

The big concern with oil is that politics would seem to be driving the price at the moment far more than anything involving fundamentals or technicals.

That aspect's keeping me out unless it reaches a very low level which clearly can't be sustained.


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## ducati916 (27 November 2018)

So still no COT report.

Oil trading higher. For the moment I'll sit tight SHORT oil and LONG gold.

jog on
duc


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## notting (27 November 2018)

Smurf1976 said:


> The big concern with oil is that politics would seem to be driving the price at the moment far more than anything involving fundamentals or technicals.
> That aspect's keeping me out unless it reaches a very low level which clearly can't be sustained.



Yes but the manipulation is so obvious and readable.
The Saudis said over night that 50 oil isn't a problem for them and that it is 'within the range.'  Meaning they will not be rushing to shut off taps to make it go higher.
However I believe that statement was simply a prelude to Decembers OPEC and Russia meeting. They are simply pretending it doesn't matter so that they can get others on board to join them with cuts!!!!!
It's easy.  They do not like it trading below $60 for elongated periods of time unless it is to try to flush out shale players etc.  But that has proved costly and pointless a bit like Virgin's cheap seat flying war with Qantas. Virgin's little war on fares to try to gain market share didn't go so well for them, did it!?
The Russian's especially need a higher oil price and the Saudi's don't want to be the only ones doing all the cutting.  The Saudis will get their way one way or another and none of them are in the mood for a prolonged weaker oil price after what they have just been through.


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## ducati916 (27 November 2018)

The COT numbers are out.

Oil (-97,948) an increase of 5% in SHORT
Gold (-20,276) big turnaround from LONG to SHORT

I'll stay SHORT Oil.
I'm going to think on Gold overnight.

jog on
duc


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## tech/a (27 November 2018)

Duc
Don’t you risk missing a good part of a reversal 
Thinking ( procrastinating) waiting for a sign
Or are you looking to time the change of trade.


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## ducati916 (28 November 2018)

ducati916 said:


> The COT numbers are out.
> 
> Oil (-97,948) an increase of 5% in SHORT
> Gold (-20,276) big turnaround from LONG to SHORT
> ...





So I'll [have] to flip-flop in Gold. Now SHORT.

jog on
duc


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## ducati916 (28 November 2018)

tech/a said:


> Duc
> Don’t you risk missing a good part of a reversal
> Thinking ( procrastinating) waiting for a sign
> Or are you looking to time the change of trade.





There are two [main] problems: (a) when market chops and goes up/down and (b) trend reversals.

Where it is really good is keeping you in a trend. Which is [really] what you want. Generally, the profits far outweigh the negatives of (a) and (b).

Having said that (b) can often not be an issue. It is generally only an issue in a very violent [volatile] 'V' reversal. You'll probably be late in closing/flip-flopping. Otherwise (b) is actually fine and gets you out of the existing position nicely and set-up for the change, unless it goes to chop (a), which is Gold currently.

So in answer to your question, I am looking for a 'timing' signal for the change.

jog on
duc


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## ducati916 (30 November 2018)

So Gold is the problem child. It is caught currently in chop without any seeming trend. For the moment I have closed out Gold and will stand aside.

Oil however is still consistent with a trend. Subjectively I still feel that it went too low too fast. However I'll remain SHORT.

jog on
duc


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## ducati916 (1 December 2018)

So this week [now] I'll close the Oil SHORT and wait for the COT.

The reason for this is that even on heavy selling, price declined, but not in the same magnitude as previously. So discretion is the better part of valour this week. I'll simply put the position back on next week.

jog on
duc


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## ducati916 (1 December 2018)

Of course, this has had a major impact on my thinking:

jog on
duc


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## ducati916 (1 December 2018)

Lots of politics [is there not always] in the oil patch.

_*U.S. Senate vote hamstrings Saudi Arabia.*_ Saudi Arabia is aiming to cut oil production in order to boost prices, but the recent vote by the U.S. Senate to end the war in Yemen, even if it doesn’t become law, heightens the pressure on Riyadh to assuage American concerns. That gives President Trump more leverage as he demands lower oil prices from Saudi officials. Riyadh faces a choice between accepting painfully low oil prices or defying Washington by cutting production. Reports suggest they are going to try to thread the needle, opting for modest cuts that at least put a floor beneath crude prices. “President Trump has effectively put a ceiling on oil prices -- arguably this ceiling is about $70 a barrel Brent, maximum $75,” Thibaut Remoundos, founder of Commodities Trading Corporation Ltd., told Bloomberg. “It will be interesting to see if Saudi-Russia can keep the floor in place.”

jog on
duc


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## ducati916 (1 December 2018)

So this week's COT numbers are out.

Gold: (-11,553) a +43% increase, which is a reduction of the SHORT position. I am going to stand aside in Gold next week. Too choppy for me atm.

Oil: (-112,071) which is a 14% increase in the SHORT position. I'll re-instate my SHORT position. This is an uncomfortable trade currently as previously stated, too far, too fast and markets tend to have bounces, particularly in bear markets. As I am out, I'll hope for a bounce higher to place the trade.

This is now possibly an inflection point between the COTs and Mr Sadjii. Who will prevail? Looks like I am trading against Mr Sadjii's prediction [position?] now.

jog on
duc


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## notting (1 December 2018)

It's a bullish sign -


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## Triple B (1 December 2018)

Interesting to note on the world gold council site a chart on cmx futures showing net longs going from positive to negative for the first time in a long time between the last report in July 18 and the first report in August. From $1224 to $1210 that week . 
Seems we are now in that zone.


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## ducati916 (2 December 2018)

Just a few comments on the COT chart which is constructed differently to my calculation.
	

		
			
		

		
	




So this chart is calculated to show the commercials buying as a %. That % is of the three year maximum buy/sell. So when you are at 90%+ the commercials are buying [counter-trend] and this is usually enough to halt a price decline.

To date, this has not happened. What has happened is that the Funds [algorithms] chase momentum, long/short and these volumes have resulted in the price moving significantly lower.

The commercials [in this chart] stepped up their buying, near the 90%+ mark, yet the overall position went even shorter than before. Which is why, absent news out of the political deals being made, I'll put back on the short position.

That being said, price has moved too far, too fast. I would expect a pullback, or if positive news from the US [Saudi's not cutting supply] then lower prices are almost a lock.

jog on
duc


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## barney (2 December 2018)

Appreciate your efforts/posts Duc


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## ducati916 (3 December 2018)

Reports leaking out prior to the summit: https://www.reuters.com/article/us-...s-with-saudi-on-details-sources-idUSKCN1NY1GX

_The Russian Energy Ministry held a meeting with the heads of domestic oil producers on Tuesday, ahead of a gathering in Vienna of the Organization of the Petroleum Exporting Countries and its allies on Dec. 6-7.

“The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much,” said one source familiar with the talks between Russian oil firms and the ministry.

“Most people agreed that we cannot reduce immediately, it needs to be a gradual process like last time,” said the source, who asked not to be identified as he is forbidden from speaking to the media. The Energy Ministry declined to comment.
_
jog on
duc


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## ducati916 (3 December 2018)

barney said:


> Appreciate your efforts/posts Duc




Thanks, always nice to be appreciated.

jog on
duc


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## ducati916 (3 December 2018)

Unfortunately the leaked news article doesn't really help all that much.

1. The production will take time to cut. Prices fall until the cuts take place; or

2. Anticipating the cuts, the price of oil rallies.

Ultimately, the price action will determine the action that you [as a trader] will need to take. I still plan to reinstate the short position, but with news due next week, I'll close it again on the coming Friday. That is the plan.

My 'speculation' is that price falls, as getting political agreement between countries whose economies rely on oil revenues will be difficult. Add to that the US wants lower oil and the result will be effectively zero.

jog on
duc


----------



## tech/a (3 December 2018)

So now what seems to be happening is that the COT chart is taking a far less influential role as Fundamentals and speculation become the trading methodology.

I expect the results and discussion will become obtusive with no real direction or definitive positioning.

Hope I’m wrong.


----------



## ducati916 (3 December 2018)

tech/a said:


> So now what seems to be happening is that the COT chart is taking a far less influential role as Fundamentals and speculation become the trading methodology.
> 
> I expect the results and discussion will become obtusive with no real direction or definitive positioning.
> 
> Hope I’m wrong.




No the COT report will continue to inform my positioning/timing. Rather, identifying the other variables that could inform a trading position, is only to elucidate those variables. If you notice, the two analysed options are non-conclusive.

As already stated, although the COT reports lag, they still seem to have a high enough success rate to make them profitable to follow, particularly when price is trending.

Gold, currently, is an example of when to step aside as the commercials themselves are flip-flopping.

jog on
duc


----------



## tech/a (3 December 2018)

So what is your position? Other than Flat Gold.
Have you opened and closed some trades I cant seem to track them.
If so what are the outcomes?
Are there any open trades?


----------



## notting (3 December 2018)

Pop this morning is indicative that the stronger hand seems to be looking to the demand side than the supply side at this point.


----------



## ducati916 (3 December 2018)

tech/a said:


> So what is your position? Other than Flat Gold.
> Have you opened and closed some trades I cant seem to track them.
> If so what are the outcomes?
> Are there any open trades?




Currently no open trades after closing Oil SHORT on Friday.

I will place another trade in Oil and it will be SHORT when US opens.

Outcomes: Gold: meh. Oil: $

jog on
duc


----------



## Triple B (3 December 2018)

I went long wti this morning. Looks like higher lows 4hr under $50. Then the leak now all shorts running for cover!hoping for a big long bounce for the next week. If cot was net short last report the can we assume they will start closing now ie buying.


----------



## ducati916 (3 December 2018)

Triple B said:


> I went long wti this morning. Looks like higher lows 4hr under $50. Then the leak now all shorts running for cover!hoping for a big long bounce for the next week. If cot was net short last report the can we assume they will start closing now ie buying.





I will only trade during the US market hours, unless I already hold a position. But when entering a new position I prefer not to enter orders outside of market hours. I have a variety of reasons for this.

Re. the COT. The COT is historical and logic would dictate that the actual number means nothing as it is after all historic. Yet, it [seemingly] has an influence that is able to be traded.

The 'bounce' is unsurprising, in fact, I would be more surprised if it went straight down. Anyway, best of luck with your trade!

jog on
duc


----------



## notting (3 December 2018)

In the middle of last week when Trump signaled that they were making progress on some plan and working with the Chinese.  Todays agreement to stall hostilities made stocks bounce big time as it did when Trump signaled but in the US oil took a pounding on the signal at the same time.  That was a very bearish signal for oil.So it was very surprising to see what oil did today which was outperform the stocks which had the best day in about 16 months, in what appeared to be a reaction to some validation of what Trump said.

You'd think oil might have a had a little lift then drifted into the 6th Dec OPEC meeting for it's next short term trend
So either oil is not responding to the demand side at all or today's bounce on modest volume was a set up whilst the US markets were asleep.
It's worth remembering also that when Russia and OPEC cut production last time oil had a bit of a bounce but still drifted lower until Trump said he will reimpose sanctions on Iran.  That was when the big move began and ended when he gave a big break to the sanctions which rendered them almost meaningless.
So if you can get anything out of that wash, you'd imagine that oil should continue to trend down.  Will be very interesting to see what it does when the US markets hit their straps tonight. I sold today and am a bit short now as I think  today's bounce is an anomaly.
I expect oil to head  lower over all however and am waiting to buy it serious money in the low 40s .


----------



## notting (3 December 2018)

I should add that I think the cuts OPEC will announce will be modest because they will not want to aggravate Trump!


----------



## ducati916 (4 December 2018)

So I am now SHORT oil again. It is actually about $1 lower now than when the futures market opened. 

jog on
duc


----------



## ducati916 (4 December 2018)

So this was posted in the other 'oil' thread:


_The most important figure to look at is the total Open Interest. That means how many contracts have been written between the buyers and the sellers for that week. When the price of oil, is going up then the producers will be selling more as the buyers can see the price is going up, so they want to buy more at the lower price. This is when you will see a lot of OI (contracts). However when the price is falling the buyers buy less because they are waiting for a better price, therefore as the OI falls, it tells you fewer contracts will be opened.

So the important thing to look out for are Open Interest Orders falling or rising. Where you see short sellers they tend to be the suppliers who are selling their wares to those who are going long, the buyers. You must have a buyer to equal a seller. It is a two sided contract._

Open interest [OI] is the total number of open contracts at the close of trading. That is the total number of contracts long or short, not the COMBINED total.

Futures contracts are zero sum. This means that each contract [OI] must have a buyer and a seller. OI will increase by 1 when a new buyer buys from a new seller. There must be a new position for OI to increase.

OI will decrease by 1 when an existing long [who liquidates] sells to an existing short [who covers]. 

Any transaction that involves one existing and one new participant has NO EFFECT on the OI interest.

So OI is a volume indicator. However, unlike a volume indicator, it tells you whether the volume is very bearish or very bullish, or simply meh. The 'VERY' is calculated against the highest volume and the lowest volume of the last 3 years as a %.

This information is contained in the COT chart that I post. The tug of war predominantly exists between the commercials, who are charted and the big Funds, who can also be charted, but do not show on the posted chart. They are the raw number that I post.

The third number that is obviously important is the actual commodity price.

Last week, as the numbers are all lagging on the COT, we have had a situation where the commercials have been buying circa 90% of their highest historical volumes and price has declined [albeit more slowly last week] in the face of this commercial buying. This is due to the very high Fund shorting.

Funds [tend to be] are momentum traders. The algorithms jump on trends reinforcing them until they end and then [potentially] reverse or cover.

This weeks number [last week in reality] was an increase of SHORT OI. This explains *last weeks *decline.

However, for whatever [unknown] reason, this number very often persists into the current week. Of course it is far from infallible, but it is regular enough to use it [along with other variables] as a trading signal.

jog on
duc


----------



## ducati916 (5 December 2018)

Added a SHORT @ $910.75 Soybeans. Nice set-up. Probably looking to hold only for a day or two.

jog on
duc


----------



## ducati916 (5 December 2018)

A target of $900'ish.

jog on
duc


----------



## ducati916 (6 December 2018)

Close Oil SHORT.

jog on
duc


----------



## ducati916 (6 December 2018)

Close Soybean SHORT

jog on
duc


----------



## ducati916 (6 December 2018)

So some news out re. proposed oil cuts:

_*OPEC+ gears up for production cut.*_ Russian President Vladimir Putin said over the weekend at the G20 summit that Russia has agreed to go along with a production cut in Vienna. The size of the cut is undecided at this point. Saudi Arabia wants something more aggressive, but is also wary of angering Washington. Most analysts predict a middle-of-the-road production cut. “Given Saudi Arabia’s need to balance a host of conflicting interests, our basecase scenario is a de-facto Saudi-led cut with Russian participation, but a flexible agreement that shies away from specific targets,” Verisk Maplecroft said in a note to clients. Saudi oil minister Khalid al-Falih said on Tuesday that it was still “premature” to lay out the specifics of the deal.

jog on
duc


----------



## ducati916 (6 December 2018)

Long Cocoa


*amend that, my order does not seem to be going through

jog on
duc


----------



## ducati916 (6 December 2018)

Long Palladium

jog on
duc


----------



## ducati916 (6 December 2018)

Close Palladium

jog on
duc


----------



## ducati916 (6 December 2018)

LONG oil. This is an overnight position.

So just a quick [rough & ready] update: Oil SHORT [-] Soybean SHORT [-] Palladium LONG [+]

Where [-] = a loss and [+] = a profit

jog on
duc


----------



## tech/a (6 December 2018)

Duc
These trades don’t seem to follow the longer term 
Method first introduced. Using long and short hold data.
More news based short term - very short term.


----------



## ducati916 (6 December 2018)

tech/a said:


> Duc
> These trades don’t seem to follow the longer term
> Method first introduced. Using long and short hold data.
> More news based short term - very short term.




The oil trades are the trades I use the COT for. While it is an important variable, I am not a slave to it. Today [oil] is more a technical/news based position. Also, given that the COT is lagging and there are issues at turning points, I am exercising my discretion. Discretion = gut feel = guess. I feel lucky. Especially now that I am on the same side of the trade as Mr Sadjii

Turning points are choppy. Once I can jump on a trend, then COT is helpful. For the moment, I think we are at at least a bounce in oil. Whether it takes hold, I have no idea.

Soybeans and Palladium were just quick opportunities that were available. I may look at the COT data for Soybeans, I quite like this commodity, particularly that Gold is currently choppy.

jog on
duc


----------



## sasch (6 December 2018)

ducati916 said:


> LONG oil. This is an overnight position.
> 
> So just a quick [rough & ready] update: Oil SHORT [-] Soybean SHORT [-] Palladium LONG [+]
> 
> ...




Thanks for your thread Duc. 

I have never thought about trading this way before.

If it is not too much trouble, is it possible for you to include profit/loss in R multiples when you close a trade? Example: close Soybean +10R


----------



## tech/a (6 December 2018)

sasch said:


> Thanks for your thread Duc.
> 
> I have never thought about trading this way before.




Most people trade this way I think!


----------



## notting (6 December 2018)

LOL


----------



## ducati916 (7 December 2018)

Quick update:

I was on the verge of puking up oil, but I am fingertips in this trade, but not happy. I blame Mr Sadjii.

I added Orange Juice at $140.71. I'll hold this until at least tomorrow then make a decision.

jog on
duc


----------



## ducati916 (7 December 2018)

sasch said:


> Thanks for your thread Duc.
> 
> I have never thought about trading this way before.
> 
> If it is not too much trouble, is it possible for you to include profit/loss in R multiples when you close a trade? Example: close Soybean +10R




It was never really my intention to day-trade, but it seems to have worked out that way somewhat. What I'll do from next week is screen-shoot the entry and exit and add them to the post. That is probably more use than anything else.

jog on
duc


----------



## ducati916 (7 December 2018)

So oil, added to position. You can see my shocking first entry, which is why I was seriously close to puking it up.

Second entry far better, although still no guarantee of anything.



jog on
duc


----------



## ducati916 (8 December 2018)

So I exited all positions Oil x 2 and OJ. for the weekend. Both were [+]

jog on
duc
duc


----------



## ducati916 (8 December 2018)

So atm I'm looking at platinum. 

Buy LONG

jog on
duc


----------



## tech/a (8 December 2018)

How did you get out of oil with a +

Palladium ——-why long what’s the set up 
Rule or indicators?


----------



## ducati916 (8 December 2018)

tech/a said:


> How did you get out of oil with a +
> 
> Palladium ——-why long what’s the set up
> Rule or indicators?





Oil was an average down [LONG]. The strong bounce on lucky news supplied the rest. More luck than anything else, that was an initially very bad entry.

Platinum - is set-up.

jog on
duc


----------



## ducati916 (9 December 2018)

So there was a bit of a surprise cut in OPEC:

_*OPEC+ succeeds, agrees to cut 1.2 mb/d. *The obvious major news of the day comes from Vienna. OPEC+ agreed, despite a lot of jockeying, to cut 1.2 mb/d of supply beginning in January. OPEC will contribute 800,000 bpd and non-OPEC will cut by 400,000 bpd. The group met on Thursday but cancelled a press conference, raising doubts about the ability to reach an agreement. Iran held up the talks early Friday because it refused to accept limits on its production, although, to be sure, any limit would be symbolic anyway since its output is declining due to sanctions. Iran was exempted from the deal. Oil sank on Thursday and in early trading on Friday, but prices spiked by more than 4 percent when an agreement was announced. _

There are no COT numbers yet. Once the numbers come out [guessing that they will be bullish] I'll post them. If they are, I will go long on Monday.

jog on
duc


----------



## ducati916 (10 December 2018)

Here is Mr Sadjii's number cited as a fundamental support of prices.

*Low oil prices challenge U.S. shale. *Drilling activity could fall 10 to 20 percent in the U.S. next year if oil prices stay low, Steven Pruett of Elevation Resources LLC toldReuters. Many analysts see $50 per barrel as a key threshold. “The reality is a lot of them get scared at $50, and their bankers get scared at $50,” Phil Flynn, an analyst at Price Futures Group, told Reuters.

jog on
duc


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## ducati916 (10 December 2018)

OPEC break even costs.


----------



## ducati916 (10 December 2018)

And the Shale chaps


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## ducati916 (10 December 2018)

Not exactly a commodity, but added the Nikkei


----------



## ducati916 (10 December 2018)

Close Nikkei for a small (+)

jog on
duc


----------



## ducati916 (10 December 2018)

Lets try a long in Nas 100
	

		
			
		

		
	




jog on
duc


----------



## ducati916 (10 December 2018)

Close Nas 100 small (+)

jog on
duc


----------



## tech/a (10 December 2018)

Oh my


----------



## ducati916 (11 December 2018)

LONG Oil. Still no COT [probably delayed again due to Bush Sr's day]. So anticipating guessing where the COT might be [ie. less bearish].

jog on
duc


----------



## ducati916 (11 December 2018)

tech/a said:


> Oh my





Just looking [testing with toe] out of US trading hours the volume/volatility. Nice time of day for me. However too many distractions.

jog on
duc


----------



## ducati916 (11 December 2018)

This week's COT numbers are out. As I've only got in from work, I'll post them up later.

jog on
duc


----------



## notting (11 December 2018)

ducati916 said:


> So there was a bit of a surprise cut in OPEC:




No it wasn't.
Every man and is dog expected the cut to be between 1.2 and 1.4.
Enough to make a difference and not enough to upset Trump


----------



## ducati916 (12 December 2018)

Close Oil LONG [+]

jog on
duc


----------



## ducati916 (12 December 2018)

Chart




jog on
duc


----------



## ducati916 (12 December 2018)

So the new COT number is [-101,714]. Which is a 9% decrease in the short position. The number is bullish in as much as it will probably prevent further [serious] declines, but not so bullish that it will ignite a new trend higher, or not atm.

My [guess] interpretation of the number is that we will see some chop. Hence my [much] shorter term perspective. I'll be looking more long than short, but, I will not be making an outright commitment long until a trend establishes itself and the COT numbers are consistently declining. They are after all still relative to earlier numbers, very short.

jog on
duc


----------



## ducati916 (12 December 2018)

I'll be looking for a long position on S&P500 on any intra-day pullback

*Placed a buy LONG at 2645

jog on
duc


----------



## ducati916 (12 December 2018)

On oil, Smurf had this to say:

_USA = 660 million barrels able to be released at at a rate of 4.4 million barrels per day.



In short the notion that US President Donald Trump decides to dump 4.4 million bpd of oil on the market is not totally out of the question in my view. That may seem an odd thing to do but we are living in a time when many "unthinkable" things do tend to happen "just like that" and in that sense I note the apparent tensions between Trump and OPEC and Trump's repeated calls for lower oil prices.

As background to that theory, booming US oil production does substantially remove the original rationale for having the strategic reserve stockpile. At the very least it substantially reduces the size it needs to be in order to cover any given period. That being so, and adding in the political factors, my thinking is that a substantial release of oil is not out of the question. A slump in price would put a stop to the US production boom yes, but never count on politicians of any persuasion to think too far ahead._

Now that is an analysis, whether it comes to fruition or not, is definitely worth considering. It [could] also explain the current COT number.

Certainly the analysis that I have been reading over the past few weeks was pretty consistent that Trump wanted the oil to flow and lower prices. That OPEC cut, is a something that he might well take personally, that is the sort of chap he is. Therefore as retaliation, he releases the reserve. Why not.

jog on
duc


----------



## ducati916 (13 December 2018)

LONG Orange Juice.

Not a great entry at $138.90

jog on
duc


----------



## tech/a (13 December 2018)

Why long Orange?

Are you ever concerned about a locked limit event occurring 

Radge has some horror stories.


----------



## ducati916 (13 December 2018)

tech/a said:


> Why long Orange?
> 
> Are you ever concerned about a locked limit event occurring
> 
> Radge has some horror stories.




Yes.

However, that has to be managed as best you can. There are a couple of ways, one of which I use, which is simply trading the volatility of the position rather than the price of the position. In this structure lock limits add [significantly] to your profitability.

jog on
duc


----------



## tech/a (13 December 2018)

How do you trade it? Options
If your on the wrong side of the volatility
Locked limits can smash you.


----------



## InsvestoBoy (13 December 2018)

tech/a said:


> How do you trade it? Options
> If your on the wrong side of the volatility
> Locked limits can smash you.




If you use options you can always limit losses, contractually. 

Long Straddle/Strangles provides long volatility have a defined pre-set loss, which is equivalent to total premium paid.

Short Iron Condor short volatility with defined pre-set loss.

You generally need to hedge deltas as the underlying moves in either case though.


----------



## ducati916 (14 December 2018)

tech/a said:


> How do you trade it? Options
> If your on the wrong side of the volatility
> Locked limits can smash you.




If your structure [of the trade] is long the Option and short the underlying [futures/stock] adjusted to the correct ratio [gamma/delta] then extreme volatility [and lock limits] work very well with that position.

You are then essentially trading volatility, not price. The more extreme the price moves [in any direction] the greater your profits. This is generally how I like to trade [for many years now]. You are agnostic to price movement, except that you want [need] it to move.

jog on
duc


----------



## tech/a (14 December 2018)

Duc

Can you put up the positions of both sides of a few trades
At time of setting up the trade short or long and at the
time of closing out a trade with the finished result on each
side.
Would be good to see how this plays out in real time.
What is the average length of a trade?

How do you pick the option.
How do you choose option or Future if both are available.

Interesting.


----------



## ducati916 (14 December 2018)

tech/a said:


> Duc
> 
> Can you put up the positions of both sides of a few trades
> At time of setting up the trade short or long and at the
> ...




tech,

You would pick the Option based on a low Implied Volatility [IV] to its historical volatility.
You would want therefore the asset class [commodity] historically to be volatile.

You then input the numbers into a Black Scholes [BS] calculator using your projected Volatility, which is based on the [higher] historical volatility than the current [low] IV. This will provide you with a 'hedge ratio' or 'delta'.

You then buy the Call and sell the underlying [futures].
Periodically you re-adjust the hedge ratio via BS.

This may involve buying back short futures, or selling additional futures [if price moves higher]
At Expiry, you close the position. If realised volatility is higher than IV when opened, you [should] be in profit. I say should, as depending on commissions etc, you might have less than the theoretical model predicts.

Usually 10 weeks is about right. Big moves [down] can take the Option too far out of the money to make it worth holding simply a long option. Your profit will tell you this and any remaining value in the option.

So yes, I can do a trade. I'm looking at oil [again] currently as IV is coming down [it was as you might imagine, pretty high there for a while].

Hence a flippe-floppe is only taking profits on one side of a position.

jog on
duc


----------



## ducati916 (14 December 2018)

So:





These are your inputs.

Currently IV = 35.5%, thus a conservative input of 45% yields a theoretical profit.
Current cost of a Call on oil with 62 days to expiry = $3.27.
If vol goes higher, it was in the 80's at one point, higher profit.

I'll put the trade on, the numbers will be slightly different [obviously] later when the market is trading.

jog on
duc


----------



## ducati916 (15 December 2018)

So I opened a trade in NFLX.

Long February Call Strike $275 (x2) @ $23.85 [expiry 15 Feb. 2019]
Short 100 shares @ $274.64

The IV rises regularly to 60%+ currently it was sitting at 49%, so 55% should be a fair guess.

jog on
duc


----------



## ducati916 (15 December 2018)

Oil is currently looking [on a chart] very bearish.

The entry point however is not [currently] to my liking. It is interesting that the COT indicated a short position based on last week's numbers. I might try some quick trades short if I get a good entry point.

jog on
duc


----------



## ducati916 (15 December 2018)

ducati916 said:


> Oil is currently looking [on a chart] very bearish.
> 
> The entry point however is not [currently] to my liking. It is interesting that the COT indicated a short position based on last week's numbers. I might try some quick trades short if I get a good entry point.
> 
> ...





Looking at a 'longer' chart [timeframe], I'm far more bullish. So I am LONG at $51.06 [1 contract]. I will let this trade run over the w/e into next week. It will also be interesting to see what the COT number is this week. I am guessing that there will be a reduction in the short position.

The low is $49.43 which is too low for me. The next low is $50.22, which will be my bail out point.

jog on
duc


----------



## ducati916 (15 December 2018)

However, the bearish news is still out there:

_*Signs of demand slowdown in Asia.*_ Refining figures in Asia suggest demand could be slowing down in the region, Bloomberg reports. Asian refining margins are at an eight-month low, which could be a leading indicator of slowing consumption.

_*Neutral Zone could reopen. *_Saudi Arabia and Kuwait are nearing a deal to restart idled oil fields in disputed territory along their shared border. The so-called Neutral Zone oil fields have the capacity to produce 500,000 bpd, but have been offline for several years. The U.S. government has leaned on both countries to resolve their differences, with an eye on shrinking supply from Iran. *Chevron (NYSE: CVX)*, which jointly operates one of the fields in Kuwait, said it maintains “readiness for a production restart when that time comes,” according to the Wall Street Journal. 

_*EIA: U.S. to average 12.1 mb/d in 2019. *_The EIA said in its latest Short-Term Energy Outlook that the U.S. should average 12.1 mb/d in 2019, up sharply from a 10.9 mb/d average this year. Notably, the production estimate is mostly unchanged from previous months, even though oil prices have crashed. The EIA even lowered its expected price for Brent and WTI in 2019 by roughly $10 per barrel, but the agency clearly thinks that the production gains are mostly baked in already. 

So I will probably have to close this trade prior to POO reaching $100/b.

jog on
duc


----------



## ducati916 (16 December 2018)

So this week's COT number is (-103,628) which is a 2% increase in the SHORT position.

Certainly the POO has stayed flat and is trading in a fairly tight range.

I would argue that because the Commercials are generally counter-trend traders, that they are still short near their previous highs, that there could well be further price declines.

The takeaway message [for me] is: trades of short duration until a new trend is established. Ranges are a trend, but they require long/short trades to make money, which is where we currently seem to be.

That would mean for me, dropping down from a weekly or daily chart into an hourly chart.

jog on
duc


----------



## ducati916 (16 December 2018)

Given that the Commercials are a proxy for the Producers who want to exchange oil for cash, has US production slowed due to the current price decline. No not really. They are still selling high amounts, possibly to beat out any further price declines.

With demand slowdowns, even though OPEC has said reduced supply early next year, currently, supply is potentially too high. Too high a supply equals lower prices.

Therefore this current range, could, very easily break lower.




jog on
duc


----------



## ducati916 (18 December 2018)

After some flippe-flopping through the night and early morning I am now SHORT oil.

Increasingly I found holding duration of long trades was diminishing and the profits were also shrinking. Therefore I am onboard with the COT as the 'trend' could well be [starting again] lower.

jog on
duc


----------



## ducati916 (18 December 2018)

Nothing to do in the NFLX position.

jog on
duc


----------



## ducati916 (18 December 2018)

ducati916 said:


> After some flippe-flopping through the night and early morning I am now SHORT oil.
> 
> Increasingly I found holding duration of long trades was diminishing and the profits were also shrinking. Therefore I am onboard with the COT as the 'trend' could well be [starting again] lower.
> 
> ...




So over $1/contract in profit with trading just opening up. So I will sit SHORT and try and let the profits run, just in case this is the start of another leg lower.

The short position is consistent with:
(a) COT analysis; and
(b) fundamental news out last week; and
(c) Ann's 'megaphone' pattern [never heard of that one before]; and
(d) current price action.

jog on
duc


----------



## ducati916 (19 December 2018)

Some oil stuff:

_*Oil prices crash to one-year low. *_Oil prices plunged by more than 4 percent on Monday, and the selloff continued in early trading on Tuesday, pushing WTI down below $48 per barrel. The proximate cause this time was a report of rising U.S. oil inventories at a time when global equities were sharply down. “A large part of the move (lower) is due to a broader market sell-off, with both U.S. and Asian equity markets coming under pressure,” Warren Patterson of ING, told Reuters. “Specifically for the oil market, there are no clear signs yet of the market tightening,” he added.

_*Stock market turmoil.*_ U.S. equities fell sharply on Monday, and the selloff continued in Asia on Tuesday. Concerns about slowing growth in China and elsewhere are starting to magnify investor anxiety. Chinese President Xi Jingping gave a speech Tuesday, declining to offer new stimulus measures or proposals to ratchet down trade tensions with Washington. Asian markets fell after the address.  

_*New discoveries up in 2018. *_The oil and gas industry is expected to log the largest set of new discoveries this year since 2015. Discovered resources stand at about 8.8 billion barrels of oil equivalent, and could close out the year at about 9.4 billion boe, according toRystad Energy. “We at Rystad expect this discovery trend to continue into 2019 with many promising high-impact wells targeting vast potential,” Palzor Shenga, senior analyst on Rystad Energy’s Upstream team, said in a statement.

_*New oil and gas projects jump in 2019. *_The number of new oil and gas projects to move forward next year could jump five-fold from 2015 levels, according to a report from Wood Mackenzie. At the same time, industry spending could remain mostly flat at $425 billion, down sharply from the $770 billion in global spending back in 2014. Many oil and gas companies have cut costs and can do more with less. But WoodMac says that the industry is still far short of the $600 billion in spending needed to meet future demand.  

jog on
duc


----------



## Triple B (19 December 2018)

Yep . I went short wti after it broke below 50 and could not get back above. also gold has ground its way above 1250 today during asian session. seems little selling pressure and I expect COT to show reduced shorts.


----------



## ducati916 (20 December 2018)

Triple B said:


> Yep . I went short wti after it broke below 50 and could not get back above. also gold has ground its way above 1250 today during asian session. seems little selling pressure and I expect COT to show reduced shorts.





I'll have to update the Gold COT.

All the excitement has been in oil just recently. But yes, Gold seems to be quietly moving higher without any fanfare, probably the best way to do so.

jog on
duc


----------



## ducati916 (21 December 2018)

Triple B said:


> Yep . I went short wti after it broke below 50 and could not get back above. also gold has ground its way above 1250 today during asian session. seems little selling pressure and I expect COT to show reduced shorts.





So I joined you in Gold yesterday [last night].




Still SHORT oil.

jog on
duc


----------



## ducati916 (22 December 2018)

So things have started to move [lower] for the NFLX trade.




So currently I'll do nothing. I'm thinking to adjust at $200 if it reaches that level.

jog on
duc


----------



## ducati916 (22 December 2018)

So with Christmas around the corner, what to do with my open futures trades. I have traded through Christmas before, but once I got killed in a convergence trade where the 'spread' ballooned. It was Walmart and Target.

So I have just closed Oil/Gold. While I would like to have kept them both open, too risky for me, especially sitting on fat profits.

jog on
duc


----------



## ducati916 (22 December 2018)

News,

_*OPEC members suffering from low oil prices. *_With Brent in the mid-$50s, the budgets for OPEC members will come under strain, and perhaps only Kuwait can see its budget breakeven. Low prices could sow unrest in several OPEC member states. “At current prices, too much attention on shale, not enough on OPEC,” Olivier Jakob, managing director at Swiss consultant Petromatrix GmbH, told Bloomberg. Libya and Algeria, for instance, need oil prices above $100 per barrel. Even Saudi Arabia needs oil north of $80 per barrel for its budget to breakeven.

jog on
duc


----------



## ducati916 (22 December 2018)

This is the COT chart from the past week [so 2 wks old now].

What you can see is the tremendous amount of selling from the Commercials. As previously stated, the Commercials buy/sell oil from the Producers.

With so many of the OPEC producers needing the petro-dollar to support their economies, it would look as if they have sold as much production and forward production into the market to get the best price, given how far, how fast, price has fallen.

This week's COT numbers will be out soon. It will be interesting to see if this level of panic remains. By all accounts shale oil can be profitable far lower than OPEC oil.


jog on
duc


----------



## ducati916 (23 December 2018)

So this week's COT is at (-109,384) a 5% increase in the short position.

I will be expecting further weakness in the POO. 

jog on
duc


----------



## ducati916 (25 December 2018)

ducati916 said:


> So this week's COT is at (-109,384) a 5% increase in the short position.
> 
> I will be expecting further weakness in the POO.
> 
> ...




You know when you just wish you had held that position!




Down to $42 and change. Well the COT did signal the potential decline.

jog on
duc


----------



## ducati916 (25 December 2018)

The trick will be trying to get back in short, as this could be heading for thirty something.

jog on
duc


----------



## ducati916 (26 December 2018)

Oil trading again, looking for a SHORT entry somewhere around the $43 mark.

jog on
duc


----------



## ducati916 (27 December 2018)

SHORT oil at $45.63

jog on
duc


----------



## ducati916 (27 December 2018)

Stopped out for a loss.

jog on
duc


----------



## ducati916 (27 December 2018)

Try SHORT once more at $46.05

jog on
duc


----------



## ducati916 (28 December 2018)

Close and take profit.

jog on
duc


----------



## dutchie (28 December 2018)

Heard of this trick before Duc?

*Australian trader pleads guilty to 'spoofing' in Chicago*

An Australian commodities trader pleaded guilty Wednesday in federal court in Chicago to manipulating market prices by placing orders in the millions of dollars, then canceling them within milliseconds so that he could sell smaller orders at a profit.

http://www.kcbd.com/2018/12/26/australian-trader-pleads-guilty-spoofing-chicago/


----------



## ducati916 (28 December 2018)

dutchie said:


> Heard of this trick before Duc?
> 
> *Australian trader pleads guilty to 'spoofing' in Chicago*
> 
> ...




No not really. Seems a big risk for [him] small rewards.

jog on
duc


----------



## ducati916 (28 December 2018)

I'll be looking to exit the mini ES tonight. I'm [hoping] momentum will carry it a little higher. The site [forum] went down this morning for a time.




jog on
duc


----------



## ducati916 (28 December 2018)

All out.

jog on
duc


----------



## ducati916 (28 December 2018)

Long Soybeans at $872.25

I like this trade for a swing trade. But New Year etc. So I'll see how it goes.

jog on
duc


----------



## ducati916 (29 December 2018)

Exit soybeans....had planned to let this run, but, was exited for [+].

jog on
duc


----------



## ducati916 (29 December 2018)

Just SOLD the 10yr Note. Counter-trend trade [won't be in long]

jog on
duc


----------



## ducati916 (29 December 2018)

Closed for a [-] 

Well that was quick!

jog on
duc


----------



## ducati916 (29 December 2018)

So Oil:


*Wall Street: Oil prices will rebound. *Most major investment banks are forecasting a rebound in oil prices in 2019. Price forecasts vary widely, but most have both WTI and Brent above current spot prices. Bank of America Merrill Lync, for instance, sees WTI averaging $59 per barrel in 2019. Citi is at the bearish end with a $49 price target. For Brent, Barclays says the benchmark will average $72, and a half dozen other investment banks have price estimates within a few dollars of that price. 

_*Middle East oil producers hit by U.S. shale. *_As Bloomberg reports, U.S. shale is hitting major oil exporters from the Middle East on multiple fronts. For one, soaring production is lowering prices. But also, U.S. shipments of light crude to Asia are undercutting Saudi exports to the region. Moreover, U.S. exports of refined gasoline and naptha is creating a glut of those products in Asia, forcing prices lower. 

_*Natural gas prices in Permian fell to zero, but rebounded.*_ The glut of natural gas supply in the Permian basin – a byproduct of oil drilling – and the shortage of pipelines to take that gas to market, has led to a crash in prices. In November, natural gas prices traded near zero for much of the month, and even dipped into negative territory. Prices have since rebounded to $1.68/MMBtu in December. The inauguration of new oil pipelines next year could exacerbate the gas problem, as more takeaway capacity could lead to more drilling, which will lead to more gas production. “You’ll see things get worse and worse and worse as oil production grows and gas production grows alongside it,” J.R. Weston, an analyst for Raymond James & Associates Inc., told the Wall Street Journal.

The COT numbers should be out tomorrow, but with Christmas, they may be [very] late again. I however, am starting to feel bullish on oil [again].

jog on
duc


----------



## ducati916 (29 December 2018)

So the plan is: see if the COT numbers turn up. If they do, see what the number is. If not, then I will looking to be getting long [as close to] $45 as possible. I'll probably have a stop at $44.35'ish.

Which means that I'm also bullish on the S&P500. The two are trading pretty tightly at the moment. I'd be looking at 2483.50'ish

Of the two charts, I like the S&P500 better. Might just double the position on that one.

jog on
duc


----------



## ducati916 (31 December 2018)

_December 22, 2018: During the shutdown of the federal government, the Commitments of Traders report will not be published. When the federal government operations return to normal, CFTC will resume publication of the Commitments of Traders report._

*December 21, 2018:* Since December 25, 2018 and January 1, 2019 (both Federal Holidays) are on Tuesday, the next two releases of Commitment of Traders will use Monday data while the publication date will be Friday as usual


----------



## ducati916 (6 January 2019)

The news out of oil is bullish:

_*Oil prices poised for large weekly gain.*_ Brent and WTI are set to close out the week with the largest weekly gain since December 2016. This week, crude benchmarks could gain as much as 10 percent, owing to Saudi production cuts and a broader sense that the oil selloff has gone far enough. “Underpinning this wave of buying is mounting evidence that Saudi Arabia has taken an axe to its oil production,” Stephen Brennock, an analyst at PVM Oil Associates Ltd., told Bloomberg.

_*U.S.-China trade talks. *_U.S. and Chinese officials are set to meet on Monday to resume trade talks, and news of the meeting bolstered sentiment in financial markets. The three-month truce in the U.S.-China trade war ends in March, but the tone from officials from both countries has thawed recently. The shakiness in the global economy, which the trade war has contributed to, is also putting pressure on both sides to back away from the brink. “China has a strong desire to have a truce on trade war,” Shi Yinhong, a professor of international relations at Renmin University in Beijing, told the FT. “[T]he probability of the two sides reaching an agreement within the 90 days is growing”.

Shale issues"


_*U.S. shale activity slowed in fourth quarter. *_The collapse of oil prices in the fourth quarter of 2018 led to a slowdown in the shale patch. The business activity indexpublished by the Federal Reserve Bank of Dallas show that activity decelerated and production growth slowed. The data suggests that the U.S. shale industry was very responsive and sensitive to lower oil prices. The average prediction for year-end WTI prices from oil and gas executives was $59 per barrel. 

_*U.S. shale production problems.*_ The Wall Street Journal reported that U.S. shale companies have over-hyped the production potential from thousands of shale wells. “Two-thirds of projections made by the fracking companies between 2014 and 2017 in America’s four hottest drilling regions appear to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota,” the WSJ wrote. “Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast for those areas.” The WSJ calculated that the lower-than-expected production adds up to nearly one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. 

Still no COT numbers.

jog on
duc


----------



## ducati916 (9 January 2019)

Oil prices continue to post gains, extending a rally that is the longest in 17 months. The latest optimism centers on the ratcheting down of tensions between the U.S. and China, as well as a softer tone from the U.S. Federal Reserve. In the oil market, the OPEC+ cuts are phasing in, while Saudi Arabia has pledged to cut even deeper. “Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, toldBloomberg. “They can be very convincing when they choose to be. And so we see the potential for Brent crude to go to $70 a barrel over the course of the year.”

_*Saudi plans cuts to boost prices.*_ Saudi Arabia will reportedly cut oil exports by 800,000 bpd below November levels, going beyond what it had promised as part of the OPEC+ agreement. The Wall Street Journal reports that the Saudis are cutting deeper in hopes of engineering a price rise to $80 per barrel. Oil prices rose sharply on the news on Monday, but the market still seems too soft for a return to $80 per barrel anytime soon. Riyadh is under fiscal pressure as the Saudi budget does not breakeven unless oil prices are in the mid-$80s. 

jog on
duc


----------



## ducati916 (11 January 2019)

Long US Treasury 10yr




Which means short everything else.

POO and stocks have had a stellar bounce, run, move higher. If US Treasury yields move higher again, I think all other assets will have a bit of a retrace.

jog on
duc


----------



## ducati916 (11 January 2019)

Close for a loss.

jog on
duc


----------



## ducati916 (12 January 2019)

Turns out, a touch early




C'est la vie.

jog on
duc


----------



## ducati916 (12 January 2019)

Try again, LONG US 10 Yr yield.

jog on
duc


----------



## ducati916 (13 January 2019)

Oil entered a bull market this week, having gained 20 percent since the low point reached in December. WTI rose above $52 per barrel, while Brent moved above $61. “The mood brightens, and the market realizes that the world economy and oil demand are not grinding to a halt,” Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich, told Bloomberg. “Moreover, there is confidence that the petro-nations will cut supplies as promised to balance the market.”

_*Saudi Aramco releases audit of oil reserves.*_ Saudi Aramco released figures on its oil reserves this week, a figure that has been the subject of speculation for decades. The independent audit was originally initiated in anticipation of Saudi Aramco’s now-delayed IPO. The audit largely confirmed what Saudi officials have long said – that the Kingdom is sitting on massive reserves. The audit revealed 266.3 billion barrels of oil reserves and 307.9 trillion cubic feet of natural gas. Meanwhile, Aramco is expected to issue its first ever international bond sale later this year, with plans to use the proceeds to finance its acquisition of petrochemical giant Sabic.

jog on
duc


----------



## ducati916 (15 January 2019)

So on the NFLX trade: sell short a further 80 shares at $333.27. Total short 180.

Call Price at $63.20 so a profit of $7,870
Shares sold at $274.64 x 100 = loss of [-5,863]

Net +$2,007

Trade is still open.

In hindsight, I would like to have lightened up on the short position when NFLX had a bit of a swoon with the market. 


jog on
duc


----------



## ducati916 (15 January 2019)

US Ten Year yields are looking bullish. Which generally means that stocks are due a tumble. You could certainly argue that they are at a resistance point technically, but I would also say that it looks as if it will fail to hold the 10yr back.




jog on
duc


----------



## ducati916 (16 January 2019)

So I have now closed the NFLX trade.

Closed stock short for loss of $10,098.40
Closed Option longs for gain of $16,910.00

Net profit $6,811.60 [not inc. comms.]

jog on
duc


----------



## ducati916 (16 January 2019)

So I have a new trade to put on tomorrow to replace NFLX.

jog on
duc


----------



## peter2 (16 January 2019)

ducati916 said:


> So I have a new trade to put on tomorrow to replace NFLX.




Good, I'd like to see more of these types of trades (Stock/option combinations) in this forum.


----------



## ducati916 (16 January 2019)

peter2 said:


> Good, I'd like to see more of these types of trades (Stock/option combinations) in this forum.




The obvious advantage is that they are market neutral. That of course does not mean that they are without risk...far from it.

The risk however is 'different' to price risk. It is volatility risk. Of course, planning ahead for earnings, can increase the probability of an escalation in volatility.

The trade will be up tomorrow.

jog on
duc


----------



## ducati916 (17 January 2019)

So the new position: TSLA

July 19 Expiration
Buy 2 Calls @ $50.87 
Strike @ $350
Sell Short Stock @ 348.11 [120 shares].

IV = 60% [current]
Theoretical Vol @ 85%
HV = 74 [current daily volatility]
HV over 4 year period H = 240 L = 100 [using monthly volatility]

The tricky bit is estimating [guessing] what volatility might prevail. Within the expiry date, there should be a couple of earnings releases, usually this bumps up the volatility.




jog on
duc


----------



## ducati916 (17 January 2019)

This chart demonstrates the premise for the trade more clearly:




There is a wide band of consolidation from circa $370/$380 down to $260. It would suit this trade very well if the stock bounced up and down in this range. You would make a nice profit on the adjustments.

jog on
duc


----------



## fiftyeight (17 January 2019)

peter2 said:


> Good, I'd like to see more of these types of trades (Stock/option combinations) in this forum.




Agreed this kind of strategy has always interested me but remained on 'reading to do list'


----------



## ducati916 (17 January 2019)

My feeling, if I were to pick a direction, TSLA is headed lower.

We have earnings on:
Q4 2018 @ 20 Feb
Q1 2019 @ 8 May
Q2 2019 @ 5 Aug

For this trade, I'll catch 2 earnings releases. Should be enough.

https://www.marketscreener.com/TESLA-6344549/calendar/

jog on
duc


----------



## ducati916 (17 January 2019)

So some basic calculations:

If in 20 days the stock should fall to $250: then

Calls = $21.54 = $4,308 [loss of $5,866]
Stock x 120 x $100 = $12,000
Profit = $6,134

At which point you could [obviously] close the trade.

If in 20 days price went to $450: then

Calls = $150 = $30,000
Stock = 120 x 100 = [-12,000]
Profit = $18,000

Again, you could close the trade.

The paying of time premium, is to allow the trade time to work if it just doesn't move that $100 in 20 days.

The second issue of course is: it trades to $50 up/down. What do you do? Let it run, it reverses, or, adjust and the stock continues to run. Can be frustrating. Less frustrating than stocks triggering stops, closing the trade and then reversing though.

Helps a lot if you can [reasonably accurately] pick major turning points. Now you can rake in profits.

Prices are theoretical prices based on B/S.

jog on
duc


----------



## ducati916 (18 January 2019)

SHORT Gold.

jog on
duc


----------



## barney (18 January 2019)

ducati916 said:


> SHORT Gold.
> 
> jog on
> duc




Don't do that Duc … all my minnow Goldies are just starting to move.    

It has had a steep run.  What is your target to the downside? … Futures or ETF ? Cheers.


----------



## ducati916 (18 January 2019)

barney said:


> Don't do that Duc … all my minnow Goldies are just starting to move.
> 
> It has had a steep run.  What is your target to the downside? … Futures or ETF ? Cheers.





Futures.

I'm looking at circa 1250. That is on a daily chart, which on a weekly takes us back to the VWAP +/-

jog on
duc


----------



## barney (18 January 2019)

ducati916 said:


> Futures.
> 
> I'm looking at circa 1250. That is on a daily chart, which on a weekly takes us back to the VWAP +/-
> 
> ...




Cheers.   I reckon if you get 1250 you might get a whisker under 1240 ….. then hopefully onward and upward


----------



## ducati916 (18 January 2019)

Close take profits.

jog on
duc


----------



## barney (19 January 2019)

ducati916 said:


> Close take profits.
> 
> jog on
> duc



 So you are out Duc ??  …….. It was a swift move down so understand the profit take ….. Are you looking for another Short if it bounces quickly?


----------



## ducati916 (19 January 2019)

barney said:


> So you are out Duc ??  …….. It was a swift move down so understand the profit take ….. Are you looking for another Short if it bounces quickly?




Yes closed the trade. I'll keep an eye on it for possible new trades long/short.

It is still trading lower. I would still look at the VWAP on a weekly for initial support, which is that 1250 sort of area.

jog on
duc


----------



## ducati916 (19 January 2019)

TSLA having an uptick in volatility




jog on
duc


----------



## ducati916 (19 January 2019)

LONG Wheat.

jog on
duc


----------



## ducati916 (20 January 2019)

PALO ALTO, Calif., Jan. 18, 2019 (GLOBE NEWSWIRE) -- Tesla will post its financial results for the fourth quarter and full year ended December 31st, 2018 after market close on Wednesday, January 30th, 2019.  At that time, Tesla will issue a brief advisory containing a link to the Q4 and full year 2018 Update Letter, which will be available on Tesla’s Investor Relations website.  Tesla management will hold a live question and answer webcast that day at 2:30pm Pacific Time (5:30pm Eastern Time) to discuss the Company’s financial and business results and outlook.

If it keeps falling until an earnings surprise with a big bounce, that would suit this trade nicely.

jog on
duc


----------



## ducati916 (20 January 2019)

So $250 would look to be a reasonable target:




At which point I would most likely simply close the trade.

jog on
duc


----------



## ducati916 (22 January 2019)

_*Hedge funds closed after booking losses trading oil and gas. *_Nearly 100 energy-focused hedge funds closed from 2016 through September 2018, taking the total number down to 738, according to Reuters and Eurekahedge. That is the lowest number of active hedge funds focused on energy since 2010. “There is a massive decline in the number of funds, and no replacements,” David Mooney, founder of Casement Capital, told Reuters. “There has been a near ‘extinction event’ in commodities hedge funds.”

jog on
duc


----------



## ducati916 (22 January 2019)

LONG NQ 6751.25

jog on
duc


----------



## ducati916 (23 January 2019)

ducati916 said:


> LONG NQ 6751.25
> 
> jog on
> duc




So this was closed for a loss.

jog on
duc


----------



## ducati916 (23 January 2019)

Nice market neutral trade setting up in the futures. Will try and get a fill tonight.

jog on
duc


----------



## ducati916 (23 January 2019)

_*Oil prices pause on weak China data. *_After hitting a two-month high in recent days, oil prices have taken a breather on renewed concerns of an economic slowdown generally, and in China more specifically. On Monday, China reported its 2018 GDP growth rate at 6.6 percent, the weakest in nearly three decades. 

_*Rig count plunges. *_On Friday, Baker Hughes reported a massive decline in the U.S. rig count, with oil rigs falling by 21 and natural gas-focused rigs falling by four. The huge drop off is the clearest sign yet that the oil price downturn that began in October is starting to wear down the shale industry. Oil prices firmed up on the news. 

jog on
duc


----------



## ducati916 (23 January 2019)

CORN:
Long 20 Calls 
March Expiry (58 days)
Strike @ $380 at $7.125
Short 11 futures @ $380
IV @ 25%

jog on
duc


----------



## ducati916 (24 January 2019)

Just an update on TSLA.




jog on
duc


----------



## ducati916 (24 January 2019)

Close the TSLA trade.

jog on
duc


----------



## ducati916 (24 January 2019)

So reasons for closing the trade:

(a) The projected volatility had dropped far below that forecast [guessed]. This meant that the Options were falling faster than they were projected to. This would likely be a problem if the stock rallied. The stock [profits] would erode at delta 100%, while the OTM option would not regain its value as quickly. The projected IV was 85%. Actual IV [today] 67%. This is a big gap.

(b) There was a profit available, after a short holding period.

jog on
duc


----------



## ducati916 (24 January 2019)

Sold Calls @ $26 loss [-$4,974]
Stock closed @ $282.63 profit $7,857.60

Net profit [no comms.] $2,883.60

jog on
duc


----------



## ducati916 (24 January 2019)

Looks like a SHORT in WTI is setting up.

I may not get the trade on, off to wage slavery today. I'll have a look at it later tonight to see if there is still a possible entry.

jog on
duc


----------



## ducati916 (28 January 2019)

ducati916 said:


> Looks like a SHORT in WTI is setting up.
> 
> I may not get the trade on, off to wage slavery today. I'll have a look at it later tonight to see if there is still a possible entry.
> 
> ...




Well never got the trade on.

Looking at oil today [Monday] I'm bullish and will put on a LONG position tonight.

My concern really is around position size, as I think it could be a volatile ride. So I'll look at phasing into the position. I'll buy more if price falls on lower timeframe charts.

The 'buy' signal is the weekly, the position will be managed on a daily, but buy/sells entered on the hourly.

So the core position of 'X' contracts is managed with a rolling position. Which means the total number of contracts will vary hour-to-hour, but the core position is static, unless the overall trade signal to exit is triggered.

jog on
duc


----------



## ducati916 (28 January 2019)

Wheat: added to position.

jog on
duc


----------



## ducati916 (4 February 2019)

Oil prices gained roughly 18 percent in January, the largest gain for that month of the year on record. “A break through $55 in WTI and $65 in Brent would be a very bullish signal for these and could be the catalyst for more significant upside, with oil having stabilised over the last few weeks following the post-Christmas bounce,” Craig Erlam, senior market analyst at brokerage OANDA, wrote in a briefing. Prices lost ground on Thursday, but there are plenty of bullish landmines lurking in the market, ranging from Venezuela and Iran outages, OPEC+ cuts, and slowing U.S. shale growth. 

_*U.S. considers SPR release.*_ The U.S. government is considering a release of oil from the strategic petroleum reserve (SPR), timed with potential outages from Venezuela. Venezuela has exported roughly 500,000 bpd to the U.S., and because of American sanctions, those volumes are now in jeopardy. The only problem is that the SPR does not contain heavy crude. Already the market for heavy oil is tight while that for lighter oil is much looser. 

_*U.S. refiners looking for alternatives to Venezuela. *_U.S. refiners that import heavy oil from Venezuela are now looking for alternatives. Canada and Mexico have heavy oil, but have little scope to increase supply. “The region with the biggest shortfall of Venezuelan crudes, either through sanctions or inadvertently through further production declines is the U.S.,” said Michael Tran, commodity strategist at RBC Capital Markets, in a note. U.S. domestic medium and heavy sour grades, including Mars Sour, have seen their prices jump. “It’s nuts. Everything with sulfur in it is getting bid,” one U.S. crude trader told Reuters, referring to sour oil that is typically less desired. *Valero (NYSE: VLO)*, *Chevron (NYSE: CVX)*, and of course, *Citgo*, are the largest importers of Venezuelan oil. 

jog on
duc


----------



## ducati916 (22 June 2019)

So an interesting position in Corn is setting up.




The context is that only circa 70% of the US corn crop has been planted. It is now too late in the day to actually plant the remaining 30 million acres. My guess would be the prevailing low prices from 2014 dissuaded additional planting.

I'm not sure where else in the world corn is also planted [in sufficient quantity] and whether that picks up the US shortfall, or has contributed in the past to lower prices as a glut on the market.

Possible trading opportunity.

jog on
duc


----------



## ducati916 (2 July 2019)

Not really a commodities trade:

BABA

Long [buy] the $175 strike [June 2020] PUT 10 contracts
Long BABA stock 500 shares

jog on
duc


----------



## ducati916 (7 August 2019)

Close the position for a profit. 

jog on
duc


----------



## ducati916 (5 October 2019)

On a chart basis, I'm starting to like Oil for a long.

Long $52.71

jog on
duc


----------



## barney (5 October 2019)

ducati916 said:


> On a chart basis, I'm starting to like Oil for a long.
> 
> Long $52.71 jog on duc




All in on that Duc?   …. or looking to accumulate?  Thursday did look like a rejection of that $51 area … again!


----------



## ducati916 (6 October 2019)

barney said:


> All in on that Duc?   …. or looking to accumulate?  Thursday did look like a rejection of that $51 area … again!





Just an initial position, will look to build. I'm in USOU, which is a x3 leverage oil ETF. Will update as it moves.

jog on
duc


----------



## barney (6 October 2019)

ducati916 said:


> Just an initial position, will look to build. I'm in USOU, which is a x3 leverage oil ETF. Will update as it moves.
> 
> jog on
> duc




Cheers.


----------



## ducati916 (11 October 2019)

Added UGAZ at $12.59

jog on
duc


----------



## ducati916 (11 October 2019)

jog on
duc


----------



## ducati916 (25 October 2019)

Natural Gas (UGAZ) showing a nice divergence in technical indicators. Looking for a bit of a move higher. Fundamentally, inventories are above their 5 yr average, so any move might be short lived.

jog on
duc


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## ducati916 (25 October 2019)

So, on the news...

Today's biggest action in energy commodities is in natural gas (UNG +1.3%), with December gas settling +1.7% to $2.32/MMBtu, on forecasts of lower than normal temperatures in parts of the central and western U.S.

jog on
duc


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## ducati916 (25 October 2019)

NGas up 6% in the futures atm.

No idea why.

jog on
duc


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## Austwide (27 October 2019)

Northern hemisphere winter starting, maybe?


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## ducati916 (29 October 2019)

Austwide said:


> Northern hemisphere winter starting, maybe?





Indeed: added to a colder than expected forecast. So nothing particularly exciting.

jog on
duc


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## peter2 (31 October 2019)

ducati916 said:


> NGas up 6% in the futures atm.




@ducati916  Thanks for drawing my attention to the spike in Nat gas futures last Friday.
I looked at the UGAZ ETF and saw there was no corresponding spike. Forgot about it. Next day UGAZ spiked up and like the futures market continues to rally on the expectations of a colder winter. Did I miss a good opportunity to get in early?  I probably didn't as it's unlikely nat gas futures spiked up and UGAZ didn't respond immediately.

There must be an anomaly (that I don't know about) with the time stamp of the ASF posts.



I just wanted to thank you for posting the abnormal spike (movement) in the markets you watch. Many times an observation like this has lead to a good trade opportunity.


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## ducati916 (1 November 2019)

peter2 said:


> @ducati916  Thanks for drawing my attention to the spike in Nat gas futures last Friday.
> I looked at the UGAZ ETF and saw there was no corresponding spike. Forgot about it. Next day UGAZ spiked up and like the futures market continues to rally on the expectations of a colder winter. Did I miss a good opportunity to get in early?  I probably didn't as it's unlikely nat gas futures spiked up and UGAZ didn't respond immediately.
> 
> There must be an anomaly (that I don't know about) with the time stamp of the ASF posts.
> ...




Peter2,

The UGAZ and GASL ETF's tend to lag the futures somewhat. The oil ETF's can also have some odd movements. For example USOU tracks USO which tracks the futures. USO has some funny habits also.

Sometimes the lag can work in your favour.

jog on
duc


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## ducati916 (6 November 2019)

Natural Gas continues higher. This commodity is famous for short squeezes. No idea if one is in progress atm (unlikely as price is just inching higher) but if it keeps going, one might eventuate.

jog on
duc


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## ducati916 (15 November 2019)

So re. my oil position:

Purely on a technical basis, volatility since 10 June has been contracting. Oil now sits in a compressed range with accumulated volume on both sides of the trade.

Once something 'happens', whatever that something is, volatility will expand and POO will expand in a direction and have the additional buying/selling of those positioned incorrectly.

Worst downside could be $30 but I'd be more inclined to $40. But it will not sit there indefinitely.
Upside: best could be $80 and if it blows through $60 then $80 is really on the cards. Again, probably won't stay there for an extended period.

So: if down to $30/$40 add to position.
If up to $80, lighten position.

jog on
duc


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## ducati916 (9 December 2019)

ducati916 said:


> So re. my oil position:
> 
> Purely on a technical basis, volatility since 10 June has been contracting. Oil now sits in a compressed range with accumulated volume on both sides of the trade.
> 
> ...





So some 'lucky' news for POO. See how far the news will take it.

Opened a position in NG (on Friday). Might have to sit on it for a little while as sentiment is lacklustre atm. But I like this position going forward.

jog on
duc


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## ducati916 (10 December 2019)

Added NG on this big down day.

jog on
duc


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## ducati916 (11 December 2019)

_*Natural gas prices sink on mild weather.*_ Natural gas prices fell further on Monday on forecasts for warmer weather. Prices fell to $2.232/MMBtu, down 4.4 percent. Prices are now down by roughly 50 percent from a year ago. 


Just accumulating a position down here.

jog on
duc


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## ducati916 (13 December 2019)

The long setup signals are starting to pile up.

For the natural gas bulls, one of the most sorely needed ingredients for higher natural gas prices is lower production.

The drop in production, combined with higher heating demand, has now pushed the natural gas market back into a daily deficit.

This, combined with TDDs slightly higher than the 30-year average, is indicating to us the natural gas market is now close to balanced with production at around ~95 Bcf/d.

As for the short-term outlook, the sustained bullish weather scenario remains elusive for now. The good news is that ECMWF-EPS will publish its latest long-range outlook today, so we will be watching that closely. 

jog on
duc


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## ducati916 (14 December 2019)

Weather-related demand swings have always been a feature of commodity markets, particularly natural gas and electricity, but the cycle of significant climate events is increasing, which could cause increased volatility in an already volatile market (NG).

The demand for heating fuels will also grow relative to growing populations who will gain access to domestic gas or LPG. Increased demand, could again, increase volatility as weather patterns become increasingly volatile, disrupting that supply.

jog on
duc


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## ducati916 (21 December 2019)

_*Natural gas prices remain depressed.*_ Natural gas prices could fall even further unless there is a serious cold snap in the U.S. this winter. Investors have staked out the most net-bearish position on gas futures in a decade. 

Interesting article. Supply will come under pressure next year most likely. Yet, bears are heavily in. NG is an extremely volatile commodity, which can really jump around. 

Predicting weather. Hmmm.

I'll continue to nibble and add if price falls.

jog on
duc


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## ducati916 (21 December 2019)

Oil rigs surged by 18 to 685 after adding 4 last week, while gas rigs fell 4 to 125 and 3 rigs were classified as miscellaneous.

jog on
duc


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## peter2 (22 December 2019)

@ducati916 at  Just realised that Snoopy is your avatar, no wonder it came to mind as I was writing the post following one of yours. D'uh.

You're right, ETFs would be a sensible to go for a new trader starting the trade US markets. Thanks for the link to the ETF db. The number of ETFs have exploded. I might add a few more of the popular ETFs that aren't correlated to the US market to the list (MJ, EEM ?). 
---

Going through my list it's clear that the US markets have bolted higher and we've missed the last bullish setups. I don't chase markets. If I miss out then so be it. My job is to make sure I don't miss the next one. We could look at the hourly charts for a setup to join this trend or we could look at a lower time frame. The smaller the time frame we look at the more likely we're going to get caught up in the daily noise. We don't want to lose a few R's by being impatient. 

It would be better if we looked at others markets that have been going down, for our reversal setups.


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## ducati916 (22 December 2019)

peter2 said:


> @ducati916 at  Just realised that Snoopy is your avatar, no wonder it came to mind as I was writing the post following one of yours. D'uh.
> 
> You're right, ETFs would be a sensible to go for a new trader starting the trade US markets. Thanks for the link to the ETF db. The number of ETFs have exploded. I might add a few more of the popular ETFs that aren't correlated to the US market to the list (MJ, EEM ?).
> ---
> ...





Not necessarily: Energy, which is the last sector to trend in a business cycle is still at the station.




And its X3




Lovely set-up. The low is $12.78. So $5 risk, or, try to buy a pullback (may never come) which will depend on POO.

*Although I think we will get a pullback on the first test of the 200EMA. That would (for me) be the entry point. Commodities are headed higher, specifically energy commodities. Not so much agriculture. Base metals are thinking about it.



jog on
duc


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## ducati916 (24 December 2019)

Something up with the US $?




Or is it just thin Christmas markets?

jog on
duc


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## ducati916 (25 December 2019)

Added some more NG down here.

jog on
duc


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## ducati916 (25 December 2019)

Why?







*Natural gas* consumption in the United States reached a record high 83.1 billion cubic feet/day (Bcf/d), the equivalent of 31 quadrillion Btu, in 2018. Natural gas use rose across all sectors in 2018, primarily driven by weather-related factors that increased demand for space heating during the winter and for air conditioning during the summer. As more natural gas-fired power plants came online and existing natural gas-fired power plants were used more often, natural gas consumption in the electric power sector increased 15% from 2017 levels to 29.1 Bcf/d. Natural gas consumption also grew in the residential, commercial, and industrial sectors in 2018, increasing 13%, 10%, and 4% compared with 2017 levels, respectively.


_*Permian wells getting gassier.*_ Permian shale wells are producing a higher gas-to-oil ratio than expected, another blow to shale drillers’ profits. “Activity levels are no longer what they were,” said Artem Abramov, head of shale research at Rystad Energy. “The oil ratio is no longer sufficient to offset gas in older wells, so we’re seeing some increase in basin-wide” gas-to-oil ratios. The focus on the Delaware sub-basin is also contributing, as that area is gassier. 


_*Bank lending to Permian slows.*_ Lending to oil companies in the Permian is slowing, as banks seek to reduce their exposure. Some banks are growing more concerned that the reduced value of shale assets could fail to cover for missed debt payments. 

So although supply of gas is also growing, whether that gas actually makes it to market is debatable.

jog on
duc


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## ducati916 (25 December 2019)

How (much) lower can NG go?







So while it can definitely go lower, over some time, the probabilities favour higher. NG is currently out of lockstep with POO, so a divergence currently. POO if it stays near $60 (or higher) will eventually pull NG higher.

jog on
duc


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## ducati916 (28 December 2019)

_*Big investors swallow up unwanted natural gas assets.*_ The U.S. shale gas industry is in the doldrums, but investors with deep pockets are buying up assets on the cheap. Dallas Cowboys owner Jerry Jones invested more than $1 billion in *Comstock Resources (NYSE: CRK)*, which is targeting the Haynesville shale. There are a handful of other similar examples, which amount to bets that some companies will survive the shake out. “Having deep pockets willing to step into the fourth quarter of a gas bloodbath creates unique opportunities that appear late cycle when traditional capital is exhausted,” SunTrust Robinson Humphrey analysts wrote in a recent note. Tudor Pickering summed it up: “The punch line is simple,” the analysts wrote, “survive in 2020 to thrive in 2023.”

jog on
duc


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## ducati916 (30 December 2019)

A bit out of date:




Will update when the Christmas period is over. 

jog on
duc


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## ducati916 (31 December 2019)

Converted my long NG (UGAZ) position into a spread trade, with a 50% +/- spread between NG and Gas Producers (GASL) so short the Producers (GASX). The Producers have been on a tear recently opening a nice spread twixt the two.

jog on
duc


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## ducati916 (7 February 2020)

Jim Cramer (at the end of January) pronounced 'oil' dead.

(a) Demand for crude is going up;
(b) There are global supply constraints;
(c) The sector is (now) starved of capital;
(d) CAPEX is very low (non-existent) which creates supply issues going forward;
(e) For equities, P/S is down to 1.17;
(f) For Drillers, P/Cflw is 11.8 (as low as 2008)
(g) Integrated companies dividend yield is 4.7% with a 9% growth rate;
(h) S&P energy sector is trading at a P/E consistent with POO at $28/barrel;
(i) Analysts uniformly hate the sector.

This is the buy and accumulate sector going forward.

jog on
duc


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## qldfrog (7 February 2020)

We 


ducati916 said:


> Jim Cramer (at the end of January) pronounced 'oil' dead.
> 
> (a) Demand for crude is going up;
> (b) There are global supply constraints;
> ...



Should get another push down when people wake up to the chinese economy hit, then probably the best roi for the next 20y while people chase EV


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## peter2 (20 February 2020)

Start of a rally in Nat gas prices?  We need to see further cold weather forecasts for the US.


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## ducati916 (20 February 2020)

peter2 said:


> Start of a rally in Nat gas prices?  We need to see further cold weather forecasts for the US.





I have been busy converting my position (via spreads and options) which was a loser, into a gradual winner. It seems that fundamentally, NG has altered vis-a-vis supply, beyond any of the historic price ranges. Betting on 'weather' is not really for me.

jog on
duc


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