Wish I\’d actually gone ahead with some of these suggestions now.
Oil back in April/May was around the $115-$120 mark. It\’s now under $40. And I was looking for a put option at about $70. To put say £1,500 into.
If I\’d actually done it I\’d be able to buy a pub by now I think (although it\’s true that pubs have also fallen in value).
Although, to be more reasonable, I don\’t think I could have actually done such a transaction anyway.
I wonder what those Somali prates are thinking re ‘their’ oil tanker and it’s soon to be worthless cargo?
Why couldn’t you have done the transaction? IG Index et al offer low cost spread-betting, which amounts to the same thing.
Tijm adds: I don’t like spread betting….margin calls makes it more like futures than options. I wanted to have a loss limitation.
I think it’s gonna be at about $55-$60 per barrel at the end of 2009.
I wish I’d sold Lehman short. I wish I’d bet all my money on Obama winning. I wish I had a time machine, so I could place all these winning bets with no risk.
“margin calls makes it more like futures than options. I wanted to have a loss limitation.”
You can use guaranteed stop losses.
http://www.igindex.com.au/spread-betting/as_risk_management.html
Disclaimer: I don’t do spread-betting. I looked into it as a cheap way of doing currency hedging (which it is) but my need to do the hedging went away.
“I think it’s gonna be at about $55-$60 per barrel at the end of 2009.”
Since Brent oil just jumped by 20% today, I think you might be right.
You most certainly could have done such a transaction – there’s an ETF specifically set up to track oil prices (USO is the ticker), and there are options on the ETF. I was thinking along similar lines around the same time, and only wish I’d had the courage of my convictions at the time.
“there’s an ETF specifically set up to track oil prices (USO is the ticker)”
There’s quite a few, actually. USO is a US-listed ETF and my broker doesn’t even list it, let alone trade it. The OILW and OILB are the UK-listed ETFs tracking oil.
But these are based on rolling options contracts, and tend to underperform. A better track to oil prices is to invest in an oil services companies tracker (ticker IEZ). There’s a good article on this topic here:
http://www.marketoracle.co.uk/Article8024.html
well for what its worth i did buy the uk short oil etf at about 130 a barrel, panicked a bit at 147, then was mightily pleased when it fell towards 90. Until trading was suspended as aig, the counterparty, almost collapsed. The us government rescued us and i sold out at 50 so a return of about 2.5 times. Theres a lot of useful investment experience there. Btw its now fully collateralized so at least that cant happen again.