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Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,095 since Dec 2013
Thanks Given: 4,445
Thanks Received: 10,288
It exists but its a very very small space. I've been trading this stuff since electronic trading began over 10 years ago. Back then, understanding trading, and computers, and being slightly ahead of the curve, meant it was easy making money off of ineffecinecies. As time has passed more and more people have realized this and the arms race begun. Today you can still make money on what I was doing 12 years ago, but only if you have the fastest hardware in the industry and a propietary deal with the exchange. I have niether. As such I have continued to innovate and moved further and further down the liquidity curve. Hence why a lot of what I do now is in less liquid products. It's not worth the new big guys efforts to even compete in these products. But yes 10 years ago a good autospreader was like buying a license to print money - just like having a badge in the pits. Today a good autospreader does little more than get you a reasonable seat at the table.
I've worked hard to get where I am, but the second biggest reason I am where I am today is experience. I've been in the energy trading arena now for 27 years, and as you can imagine in that time I've seen a lot of things. That can't be taught. I can show you what I did 12 years ago but that information is useless today, I can show you want I do today but that would a) just hurt me and b) be useless to you in 6 months time when everything changes again, unless you know enough to change as well and ideally be ahead of the change, and that can't be taught.
Anyway who are these "shysters" you talk of?
There's directional spread trading, which is higher risk, and probably more fundamental in nature and then there's statistical or arbitrage style tradiing. The later tends to be mean reversion in nature, which throws many of the traditional money management rules out the window as you increase your position as it goes against you. As a rule I think trading is a fools came for the majority of people. Commissions and slippage will mean that the average trader will lose. When you start trading spreads, commissions are double, and slippage maybe the same, possibly worse. Hence unless you have a better understanding your more likely to lose than if you were just trading outrights, it will just be a slower death. Saying that I think it's easier to have an edge in spreads than it is in outrights. Why? Well when you trade spreads you are trading curve shape. The curve though moves based upon order flow at certain parts of the curve. Large producer selling Cal 20 WTI? The bank getting the order is sellling Z19 and Z20 (and maybe M20) against it. Hence they get depressed versus other points on the curve. You take advantage of that. Then a refiner comes in to hedge Q1'19 heat cracks. Now Z18 gets pushed up. So now your selling Z18 versus other points on the curve. Rinse, repeat. You obviously need to know, which spreads to trade (ie value) in each situation, but its doable.
Twenty years ago, trying to do what you want to do in NYC would have been easy. Today I'm not sure it's easy anywhere, but I suspect it would be easiest in Chicago.
In options a butterfly (or iron fly) is a straddle vs a strangle, ie wings vs body. Since F = +C -P n iron fly can easily be translated into an all call or all put fly, which is a call spread vs a call spread. Generally trading option flys is a bet on volatility.
Futures flys are spreading spreads. ie Buy Jan/Feb, Sell Feb/Mar or +1 Jan, -2 Feb, +1 Mar, or body (G) and wings (F+H). Why would you do this? Well if you think Feb is to high you might sell it versus Jan and Mar. Why Jan and Mar and not just one? Well as you said, spreads often move directionally with the market. So if you sell Feb and buy Jan against it, and the market moves down, you could still lose money even if you are right. But if you sell Feb and buy both Jan and Mar against it, as long as your right, shouldn't matter which direction the market moves.
Now imagine that it's not Feb that you think is expensive, but the Jan-Feb spread. So now you sell Jan-Feb and buy both Dec-Jan and Feb-Mar against it. So your position is +1 Jan, -3 Feb, +3 Mar, - 1 Apr, aka a Double Fly. Why you don't hear about double flys much in Crude, and pretty much never in Natty, in Eurodollar's it's actually listed as an exchange traded single product.
is this just a temp bounce for the next shoe to drop with NOAA 8-14 day forecast being above average
Are there any reports/views that are useful for NG (i like Agweb Chip flory for grains.. more of a talk but can gather what real farmers/traders think)
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,095 since Dec 2013
Thanks Given: 4,445
Thanks Received: 10,288
Unfortunately I don't know of any good free reports. Many of the bank analysts produce some decent research but it's often a little dated and not easy to get on their distribution lists.
Sorry they obviously removed them. I've emailed ICE and the person who made them to check whether they are available in a different format. Shame because they were the best 'how to relative value trade in the energy markets' I've ever seen.
so NG March is at 2.67
Spot is way below.. in fact lost a few cents.. 0.11 at Henry Hub
April is at almost 2.8
What does this mean? Does this mean that April at some point has to reach march ending price of 2.67? or this is not a real gap?
Usually i thought they converge on the last trading day..
Does this mean that April will be a good short.. ?? he he
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,095 since Dec 2013
Thanks Given: 4,445
Thanks Received: 10,288
Settlement was 2.627. That was the weighted average of all NGH7 trades today between 1300 and 1330 Central on Globex. If you take physical delivery of a contract the gas is delivered rate-ably over the entire month. With the current shape of the curve, expectations are that prices will be higher at the end of the month than at the beginning of the month. For what it's worth by the end of the day (4pm), the swing swap was trading 2.5c over settlement.