Bill Luby
About this author:- Profile & More Articles
- Visit 'VIX and More'
- Subscribe to VIX and More Newsletter
Since first becoming a tropical depression on the morning of August 25, Gustav became a tropical storm, then a hurricane, and is now back to being a tropical storm – at least for the time being. Most models have Gustav reaching hurricane strength again later today, perhaps as soon as the next National Hurricane Center [NHC] update, which is only a half hour away [5PM EDT].
If anyone is interested in watching a movie of the evolution of Gustav and the evolution of the five day forecast cone, I can highly recommend the Gustav graphics archive at the NHC web site.
At least as interesting as the changing fortunes of Gustav and predictions for Gustav’s future has been the market’s reaction to crude oil and natural gas prices. In the graph below, courtesy of StockCharts.com, I have captured the change in crude oil prices (via the USO crude oil ETF) as well as the change in the new ‘Oil VIX’ [OVX] that was recently launched by the CBOE. Note how volatility (the candlesticks) has generally followed the underlying up and down, though it has remained elevated as oil prices (the gray area chart) trended down this morning.
Those who are looking at options plays on oil and gas are likely to see long positions facing an uphill battle against time decay in the current highly speculative environment. As a result, spreads and short volatility plays should look more attractive as alternatives.
Related Articles
|
Top Rated Comment Streams:
-
1.Hedged In661
- 2.
-
3.Smarty_Pants399
-
4.cos1000305
-
5.axelrod608296
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
This article has 7 comments:
-
User 44928
-
44 Comments
Aug 28 09:40 PMshortfall from Gustav...and the price dropped immediately..still it's
creeping up there as we speak.
-
Aly-khan Satchu
-
20 Comments
My Website
Aug 29 02:02 AMRussia may cut off oil flow to the West
www.telegraph.co.uk/mo...
It seems sensible to be long now.
regards
Aly-Khan Satchu
rich.co.ke
-
mangolfer
-
162 Comments
Aug 29 07:19 AM-
mangolfer
-
162 Comments
Aug 29 08:02 AM-
mangolfer
-
162 Comments
Aug 29 08:02 AM-
PAUL&$HARK
-
3 Comments
Aug 29 08:18 AMThis graph have no meaning to an experienced trader but I expect novice trader would not sleep at night thinking about what you just showed and how to interpret it.
Relax everybody,here what it means (nothing actually)
The volatility in commodities markets are little bit different from let's say stock market index as daily fluctuations are bigger,that simple.
The higher is ATR (average true range a day) the bigger is volatility,nobody can make money knowing volatility of let's say CL or NG or just anything else as prices are driven by expectations for the future but even then daily fluctuations are daily fluctuations.
If one have good idea where the price of anything goes then he gives a s..t about volatility,Gustav and just anything else.
Yesterday I was trading alltogether about 20-24 mini NatGas in and out 1 hour before close of electronic session.I didn't even had time to read about Gustav as for me 10% fall in the price of NG was enough to cut few cents up and down the way when in a meantime some other traders tried to know more about Gustav.I made about 2500$ in less than 30 minutes same as I made 2200$ selling hen buying 2 CL,it took about 10 minutes.
Who is Gustav by the way?Where he comes from?Is he cool?
-
ksmithdc
-
92 Comments
My Website
Aug 29 03:10 PM