Tuesday...Crude Oil is the bargain

[neilgin1]

If i was a size player, the "bargain" would be Crude Oil, imo...you would do naked longs, and a mix of "2 piece" amd "3 piece" front spreads, what those are is you buy Sep oil $1.40 under selling Dec oil against it, thats a 3 piece, and to buy Oct Oil a dollar under selling Dec oil thats a 2 piece...."size" would mean doing this in 100 to 500 car lots up to the max position....you'd be looking for .50 profit a car. also buying naked Oct and Nov longs below 80 would be good intermediate term trades, you could get 10.00 dollars profit per car....it'd be a wild ride for sure, but Crude is the ultimate tangible. alonger term bull crude spread would be a 6 piece, buying Jan Crude 2.50 to 3 dollars under selling June 12 crude against it, that could yield a 1.50 profit...in size. Dont think that there aren't guys this morning strategizing such trades. Big oil has a lot of money and some GOOD traders.

if i stayed, and was a size player, thats what i would do....today.

if i was an equites player, i'd be going for stocks . big caps with P/E's under 10, grocery, pharma amd agri concerns.

[barrytrot]

What is a "naked long"?

[68Camaro]

What is a "naked long"?

Agreeing to sell something which you don't own at a future date for a higher price.

[barrytrot]

Ok, so selling the option. I.e. a short option.

Ok, thanks.

[68Camaro]

Ok, so selling the option. I.e. a short option.

Ok, thanks.

Yep, a long option.

[68Camaro]

neil can correct me on terminology 'cause I'm only a very basic simple-minded trader, so I had to go look up details to be able to explain this part of it, but a "naked" futures position is one that is not "hedged" from risk. And a hedge is a position where you offset risk by buying or selling a future (at a price) in direction opposite your risk.

For example, if you have a item that you've bought (long) at value and want to ensure that you can sell it later at a higher value, you can try to sell a hedge at a higher future price (assuming someone will accept that price at the future date, which means they are betting that the price will not go up).

As I understand it, most institutional investors selling shorts will buy offsetting longs to minimize their risk. A naked short is someone that doesn't offset. When the silver naked shorts do this in large quantities they affect the price.

If I've got this wrong someone can correct me. It makes my head spin a bit...

[neilgin1]

What is a "naked long"?

it means i buy the commodity...go long....most of my crew were spreaders, which meant for instance, we would be long (bought) July 2012 Corn say 80cents over selling (short) Dec 2012 Corn.

when i said go naked long that meant buying Oct Crude this morning at 78.84, which would have been a very good day.