Volatility is your friend if you know what you're doing but give me a break, this is nuts.
Or, I may be getting old.
Nope, sticking with 'nuts'.
From Bloomberg via the Chicago Tribune
LONDON — The biggest swings in crude prices since 2009 are signaling more money for traders.
The CBOE Crude Oil Volatility Index, which measures fluctuations using options of the U.S. Oil Fund, climbed to 63.14 on Feb. 5, the highest level in almost six years. More than 5 million contracts of Brent crude, the global benchmark, traded on the London-based ICE Futures Europe exchange last month, an increase of 29 percent from a year earlier.
"Volatility for traders is always what you want, you don't want a market that has nothing to offer," said Doug King, the London-based chief investment officer of the Merchant Commodity Fund, which has $275 million under management. "The volatility in the last two months has been outsized."
While the turmoil in oil markets has roiled economies from Russia to Venezuela, sending currencies crashing and undermining government budgets, it signals a return to the volatility on which commodity traders thrive. It also means an annual oil- industry gathering in London this week will be the most interesting in years, according to Hamza Khan, a senior commodity strategist at ING Bank NV.
Brent declined for a seventh month in January to the lowest level since March 2009 amid a global glut. It then rebounded in the biggest two-week gain for 17 years through Feb. 6 on signs drilling was slowing in the U.S. These swings follow two years that had the lowest volatility since at least 2007, the CBOE index shows.
"Prices have been moving by $10 a barrel over the last few years," Khan said in an interview in London on Feb. 4. "In 2015, they could rise by $30, $40, even $50. If you're on the right side of that trade it presents huge opportunities."
Brent has averaged $51.50 this year compared with about $109 a barrel in 2013 and $99 last year.
Relatively small price swings curbed commodity-trading profits in 2014, according to Trafigura Beheer BV, the world's third-largest independent oil trader. The company had a gross profit margin of 1.6 percent compared with 1.4 percent in 2013, it said in its annual report.
Earnings at Glencore's energy-marketing unit fell 55 percent in the first half of 2014 because of "fewer trading opportunities and low volatility in oil pricing," the world's second-biggest oil trader said in its mid-year results in August....MORE
