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  1. It looks like the biggest challenge is getting an effective hedge by buying one of the futures contracts that doesn't get the overnight charge. Looking back over the last week, whether you were buying Jun or Jul contract the price movement between close at 10pm and open at 11pm is quite divergent from the DFB price meaning any up movements might not be picked up by the futures contracts. What's really strange is that the DFB price is supposed to be calculated from the Jun & July future. However from market close on Friday at 10pm to market open at 11pm Sunday both the Jun and July future lost around 30 points and the DFB gained 6 points. Not sure how that is possible because surely if the DFB is calculated as some sort of equidistance price between the 2 contracts (as a product of time) then if both contracts move negatively then the DFB must do as well. I tried to get clarification on the DFB pricing model from IG but not had a response. Seems a bit shady and potentially a feature of them trying to lessen the arbitrage opportunity outlined above.
  2. Is anyone taking advantage of the overnight charge by shorting US oil just before 10pm and closing on re-open at 11pm? By my calculations the current spread would offer a £23 per point overnight charge (minus interest on any leverage taken). Shorting the DFB and then going long on a futures contract should mitigate any price movement in the minute or 2 between open and close (understand there could be some slippage). Am I missing something glaringly obvious as I usually do? I understand this isn't a typical opportunity because of the abnormal spread but it seems to be there nonetheless.
  3. S&P 500 was cheaper this time last year than what it is now 😂
  4. I disagree, the price moved back far too much. If you adjust for inflation when the spot price hit $7 on Tuesday it was 30% less than the lowest price recorded in history going back to 1860. The price was always going to rebound from there unless the need for oil was going to become redundant - which it obviously isn't. It just got traded down and significantly overstretched at that price - possibly the rebound is too much as well but who knows?
  5. Thanks Charlotte. Just for clarification on the statement above could you possibly answer a few questions. Firstly currently the June contract is at $11.48 and July contract at $20.22 and the spot price is $12.24. I would be interested to know the exact calculation to devise the spot price. 'As time progress' is a very global term and I think its important to categorise how time (number of days) between contracts factors into the overall spot price calculation. My main point is if in 2 weeks time the June contract is still $11.48 and the July contract is still $20.22 do you already know what the spot price would be?
  6. Sounds good but one word of caution. You will currently have quite high overnight hold costs. These are basically the costs you incur from IG for holding a long position in a commodity (oil). No point getting into the intricacies as to why but this is cost is real and when you login on the morning to check your trade you will see your balance is lower. This makes holding commodities for the long term difficult whilst spread betting. There is a way of getting around this overnight cost as it is calculated at 10pm every night (when the Oil market temporarily closes). If you close you position at 9.59pm and re-open when the market re-opens you wont miss much price move and will avoid cost. However you will have to do this everyday and you will have to pay the spread on each trade. This is why every good trade/system doesn't just look at buy and sell points but factors in costs for holding the position. The current overnight charge is high relative to normal levels because the difference between the June and July futures contract is extremely high because of the short term worry about demand. This is what calculates the overnight charge and as this normalises over time the overnight charge will reduce. All head spinning for a newbie but important to consider nonetheless. Don't worry if there are anymore questions.
  7. Technically the spot price (DFB) could become negative but you should set your own downside risk. If oil @ $0 is your maximum acceptable risk then set your stop at that. The reality is a negative spot price is totally illogical, the spot price hit $7 today and quickly rallied out of that ridiculous valuation. Potential maximum price movements shouldn't really be considered, understand why you are placing your trade, know what rules will be hit for you to take profits and what rules will be hit (stop set) for you to take losses.
  8. Inflation adjusted oil price at its lowest since 1870 🤔
  9. I'll stick some money on the table then, call it my depression trade
  10. Is there merit in the suggestion that with the major equity indices rallying up to 15-20% of their previous highs that there isn't a strong belief that the economic outlook will last for a significant period? I understand that if investors have bought 'opportunities' a month ago and are willing to hold them then the mechanics of this bear market could be different but I really can't buy that. Potentially the greatest annual GDP drop in nearly a century and it appears that contagion is not being priced in at all just a short term drop in revenue and few bankruptcies. Record GDP drops are being forecast but it appears the market sees that as a temporary response to lockdown. And there won't be any 'scarring' effects. In 2007-2013 we saw the inter-connectedness of markets and how one crisis sparked another which sparked another. This issues stemmed from over expansion of the property prices and issues with liquidity not falling revenues. The suggestion is that this is short term (which is definitely priced into the markets) but all I can see is genuine business revenues significantly dropping (like they haven't before), these business then not buying from other business, who then can't afford their loans, that then go bust, which means the banks don't get their money, which sparks a liquidity crisis alongside this genuine business recession/depression. I don't want to be the grim reaper but I am flabbergasted at the markets at the moment. The notion of velocity of money is interesting when everything is going up. One persons purchase allows another persons purchase and so on and so on. But the reverse also applies and it feels like that isn't appreciated yet. For me the equity market is the short of a life time. I am not a discretionary trader and therefore my trades will reflect market movement over ideas but the part of me that has read the history of finance knows that a big big hit is yet to come. Diary note - check this post in 3 years and see how foolish I sound!
  11. Could anyone calculate the cost of currently going long DFB US oil and short US oil July futures? just in terms of overnight charges not spreads
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