Author: BART
BART is a CMT and an expert a "advanced" pattern recognition used w/in the intermarket analysis discipline. He's also an accomplished Business Development Executive providing solutions to a myriad of business markets. View all posts by BART
Gutten Tag!!! Oil will react inversely to the interest rate move. Higher rate move… or confirmation of the inevitable direction… the trade is the death nail to commodities. The mechanics of commodity pricing for the last 12 years has been predicated on the ability to use cheap money to buy contracts. Essentially worthless money on inexpensive contracts that you can make a ton of money on. You want it to go up… you buy more cheap contracts and create your own market… it is the nature of all speculative bubbles. You have to have cheap money. The price of money from a speculators standpoint is more expensive… albeit nominal with the rate move up. However, lower volumes and lack of upside and volume in the contracts market… all destroy the Time Value premium of all options pricing methodology. The inherent pricing model says time is more expensive. So time = money. It is the definition of Theta in financial calculation. Raise interest rates and time becomes more valuable. Lower interest rates and time has less value…. because purchasing it has little to know value. This will effect commodities the most… followed buy stocks… keep in mind our rise over the last 3.5 years has coincided with mega basket option trades. Baskets of equity options that have been risk balanced and sold off in retail distribution as “Structured Notes” to lower end high net worth clients. Think about that… while I’m on the West Coast drinking Grapefruit Vodka and walking a small dog. Good Night Herr Bartelloni!!! Date: Wed, 16 Sep 2015 01:10:48 +0000 To: mjcurran113@hotmail.com