G0ldfinger Posted December 20, 2010 Author Report Share Posted December 20, 2010 yep, in my opinion the options dont look that expensive but one drawback is their liquidity. With those OTC warrant style contracts you are at their mercy if you want to close out. At least with a liquid listed future you get fair value pricing either buying or selling. True, which is why American options would be preferable as an early exercise would force the issuer to pay as defined in the contract. I will possibly go for a mix, a mix also of issuers to spread the counterparty risk. As we know, in theory, American call and European call have the same value, but I (like you) somewhat distrust these OTC products where the issuer is often the only market. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 21, 2010 Author Report Share Posted December 21, 2010 The NatGas widowmaker has recovered a bit of its recent losses. The question is whether indeed one can rely on that sorta 1-month (or less) cyclicality that one can see in the spot price (see link below). I bought at the wrong time in that small cycle. But the big question is obviously whether we are going higher from here on a more permanent basis. http://www.godmode-trader.de/Henry-HUB-Nat...atural-GASpreis Sugar is still doing OK. I hope it won't turn into a widow maker either. But the medium term supply picture looks bullish really. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 23, 2010 Author Report Share Posted December 23, 2010 An update. Uranium One: I just got a dividend payment of 22.6% of the momentarily invested capital (pre-tax)! I mean, what a positive surprise. Admittedly, the stock has lost more since I bought it (temporarily IMO), but if they continue paying these kind of dividends, I don't care much about the invested capital. The other uranium miners haven't paid a dividend (yet), and don't ask about the share price. Levered sugar: Doing well, 25% up since I bought it. The levered gas widow maker: Is just that, although recently it has gained some back. So far I am maybe 18% down on it. Oil calls (2011/12): The value of those has gone down - while oil has made a new 2-year high. The investment banks try to fudge with my mind, but they picked the wrong guy. Link to comment Share on other sites More sharing options...
Gatesy Posted December 23, 2010 Report Share Posted December 23, 2010 I have gotten fed up with my broker/market maker who does not show me any oil derivatives anymore for reasons unknown to me. The issuer I had bought derivatives from earlier, Societe Generale, has more calls with far out maturities. For instance, I have discovered WTI Futures European Calls for May 2016 with strike between $84 and $95. Obviously, these babies are more expensive ($13-$16), but do I think the oil price will be below $100 in 2016? Heck, no! There is also a good interview with Jim Puplava and Eric Townsend on peak oil ("The Trade of the Century"): http://www.netcastdaily.com/broadcast/fsn2010-1218-3.mp3 So, I might buy more oil calls, long dated, and obviously this is then not really in the gambling area anymore, but more in the investment section (in the money long term call options for a lack of futures). Although, I hate to hold some paper underwritten by SG, but for small investors there is simply hardly any other way to get exposure apart from shares. Indeed that's three of you touting the long call oil trade now . Must say it crossed my mind independently a few days before your I saw trade of the decade thread, and I like the idea. I can't find the trade of the century thread again now though, can you link please? Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 23, 2010 Author Report Share Posted December 23, 2010 Indeed that's three of you touting the long call oil trade now . Must say it crossed my mind independently a few days before your I saw trade of the decade thread, and I like the idea. I can't find the trade of the century thread again now though, can you link please? You mean this one? http://www.greenenergyinvestors.com/index....showtopic=12778 Link to comment Share on other sites More sharing options...
Gatesy Posted December 23, 2010 Report Share Posted December 23, 2010 You mean this one? http://www.greenenergyinvestors.com/index....showtopic=12778 That's the one, I was getting the title's mixed up. Just doing some research of my own but taking a little while to follow it though as the naming conventions are new to me on Options. I also need to work out what I'm willing to stake and which account I can use to make the trade, but I reckon I'm quite serious about rolling just a little of my recent juniors profits into this. About 3 years ago I used Etrade for some futures trading and I also have an ODL account (hopeless customer service but quite decent access to various markets once you nag them a few times...) I recall trying to access longer dated Futures with etrade back in 07/08 and they cited lack of liquidity as the reason they wouldn;t provide me access to anythign longer than about a couple of years. But options should be easier as the broker (and you) doesn't have the margin issue if the trade goes against you. Link to comment Share on other sites More sharing options...
Gatesy Posted December 23, 2010 Report Share Posted December 23, 2010 ps. have you found any options on Mini futures contracts? Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 28, 2010 Author Report Share Posted December 28, 2010 ps. have you found any options on Mini futures contracts? I am not sure what difference the size of the underlying would make since the size of the options is usually different from the underlying anyway (i.e. usually not on one piece of the underlying, but a fraction of it). Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 28, 2010 Author Report Share Posted December 28, 2010 Update: -The Levered NatGas widow maker is further recovering, but not much. -Levered Sugar is doing well. -The Uranium One dividend was a one off because of a take-over, but I might still increase my holdings. -I might buy into Pinetree Capital sometime soon now that I had more time to read up on them. It seems a well diversified levered bet on themes that are dear to my heart. -I will start implementing 2016 oil calls this week. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 30, 2010 Author Report Share Posted December 30, 2010 The levered NatGas widow maker has now reclaimed 50% of its losses since I bought. The short term cyclicality is working for me right now. The big question is of course where we are going from here mid- to longterm. EDIT: Sometimes I wonder if I should cut my losses on this one and get out now before it's too late. Just saw another bearish article on gas yesterday or so. But then again ... Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 30, 2010 Author Report Share Posted December 30, 2010 Housekeeping. I had previously asked where and how I could trade European gas. I have found different futures contracts on the ICE pages, delivery is in Germany, the UK or the Netherlands. https://www.theice.com/productguide/Product...roup.groupId=20 My problem is that I can't find any call options on these contracts on my broker's pages. If anyone knows concrete products (calls) on these by some of the large investment banks, I would be interested to know. Cheers. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 30, 2010 Author Report Share Posted December 30, 2010 How do investment banks usually schedule new issuance of options? I ask because I can buy Brent call options up to Nov 2016, but the futures already trade up to 2019. So, when possibly could I expect longer maturities in calls? Do they issue annually, or is it fairly random? If anyone can fill me in on this. Because I might wait a little longer if I can expect 2017-2019 calls sometime soon. Cheers. Link to comment Share on other sites More sharing options...
Rosco Posted December 30, 2010 Report Share Posted December 30, 2010 How do investment banks usually schedule new issuance of options? I ask because I can buy Brent call options up to Nov 2016, but the futures already trade up to 2019. So, when possibly could I expect longer maturities in calls? Do they issue annually, or is it fairly random? If anyone can fill me in on this. Because I might wait a little longer if I can expect 2017-2019 calls sometime soon. Cheers. OTC structures are usually originated once demand is evident or perceived. If a specific product can be supplied and distributed in enough size to justify the cost/benefit then it will be issued. Usually the key driver for this is a specific institutional request. Link to comment Share on other sites More sharing options...
Errol Posted December 30, 2010 Report Share Posted December 30, 2010 A great book for those interested in commodities (I've read it and it is very comprehensive and equally well written): I should add that it is brand new - being published in late Nov 2010 - http://www.amazon.co.uk/Investing-Resource...l/dp/0470613262 Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 30, 2010 Author Report Share Posted December 30, 2010 ... the key driver for this is a specific institutional request. Makes sense, cheers. Unfortunately it doesn't solve my problem whether I should wait a little, or not. But I guess I can always average in and hope that longer maturities pop up while I am doing so. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 30, 2010 Author Report Share Posted December 30, 2010 Thanks for this comment Pixel8r. I also have mixed feelings on the junior warning, and I might take the plunge sometime soon in the wake of my SIPP arrangements. 2007/08 has shown what miners can do even in the early stages of the bull market as compared to the underlying metal. In a blow-off, this would be greatly exceeded. Certainly there are short term risks. But having the choice of buying bullion or buying miners, I can't quite see why I should wait much longer given that we're still off the 2007/08 peak of relative strength. I listened to your warning on Junior miners in your 2011 predictions podcast and have to disagree. Take a look at this graph it is the cndx:gold ratio, to me this is saying that juniors haven't increased at the same rate as gold. They are slowly starting to get back their traditional leverage to the gold market. As the gold and silver prices increase the producing juniors are making much more money, many of their mines were started with much lower prices used in the feasibility reports. So I think that they are much more likely break through the resistance you show as their results start to show this increased profit. It is all to easy to sell and take profits and miss out on this great opportunity, In the 70's certain juniors went from C$0.30 to $300+, what is the point on selling? The thing I don't get is you were big into juniors in '08 before the crash and while they were at much better valuation in comparison to gold, but have been selling ever since. I actually fully loaded up in dec '08 & jan '09 while the ratio was massively in favour of juniors and am still riding them back up. It was actually you and Dominic which switched me on to this ratio in '08, so I am surprised you haven't been seeing the value in juniors over the last couple of years. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 31, 2010 Author Report Share Posted December 31, 2010 I should possibly explain what I am doing right now. Because my SIPP can finally buy bullion, I am converting my entire SIPP into exacyly that: gold bullion. So I said to myself, fine, everytime you buy SIPP bullion you can sell 50% of that amount of your other non-SIPP bullion holdings and put that money into more risky investments/bets as laid out in my GAMBLING thread (I am referring to my oil hedge/play etc., not to the pure high potential bets). I don't really see the juniors/Pinetree investment as gambling, but it is more risky than holding bullion. So, after that process of fully committing the SIPP funds, I will hold more bullion than before, but I will also hold quite a few bets/investments with a much higher potential, and some that are more energy related. Link to comment Share on other sites More sharing options...
Errol Posted December 31, 2010 Report Share Posted December 31, 2010 Natural gas is still forming a bottom. Preparing for a massive bull market. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 31, 2010 Author Report Share Posted December 31, 2010 Natural gas is still forming a bottom. Preparing for a massive bull market. Hi Errol. What do you base your assessment on? Personally, I think the chart looks still pretty much like a bottom, and I think the complete energy sector (commodities) will move higher together, out of sympathy but also for real substitution reasons. Reading news on gas in general (in North America), there is a lot of bearishness out there, apparently people really think shale gas will create an oversupply. I am not so sure. I am still looking for ways to invest in NatGas in Europe. I'd prefer long dated call options, but haven't found anything yet. Link to comment Share on other sites More sharing options...
G0ldfinger Posted December 31, 2010 Author Report Share Posted December 31, 2010 400 shares is far too many to follow properly, and is evidence of the "shotgun" approach that PNP is using. I agree that this is a problem. Link to comment Share on other sites More sharing options...
G0ldfinger Posted January 1, 2011 Author Report Share Posted January 1, 2011 http://www.fas.usda.gov/htp/sugar/2010/sugarNov2010.pdf Since the May forecast, 2010/11 world sugar production is down, consumption is up and prices are increasing. Estimated surplus production is down from a forecast 6.2 million tons to an estimated 3 million tons. Prices are increasing due to tightening supply and to appreciation of the Brazilian real. World sugar production for the 2010/11 marketing year is estimated at 161.9 million tons, raw value, down 1.9 million tons from the May 2010 forecast. Consumption is forecast at 158.9 million tons, up 1.2 million tons from the May forecast. Exports are estimated at 51.8 million tons, down 1.8 million tons from May; and ending stocks are estimated at 26.5 million tons, down 564,000 tons Link to comment Share on other sites More sharing options...
G0ldfinger Posted January 3, 2011 Author Report Share Posted January 3, 2011 Marc Faber likes NatGas: http://wallstreetpit.com/55289-marc-fabers...ection-imminent ... natural gas is too cheap on an inflation adjusted basis. Link to comment Share on other sites More sharing options...
G0ldfinger Posted January 3, 2011 Author Report Share Posted January 3, 2011 I have now also bought some Pinetree Capital and some Denison Mines. As for oil, I started to implement my call strategy. See OIL thread. Link to comment Share on other sites More sharing options...
G0ldfinger Posted January 3, 2011 Author Report Share Posted January 3, 2011 The NatGas levered widowmaker is now almost back to 100%, while levered sugar has given away almost all its gains since end of last year. Link to comment Share on other sites More sharing options...
G0ldfinger Posted January 4, 2011 Author Report Share Posted January 4, 2011 Gas still heading higher. The levered widow maker has now recouped all losses. Levered sugar still off the recent highs. Link to comment Share on other sites More sharing options...
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