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The real reason for this year's oil price rollercoaster
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10-04-2006, 10:40 AM
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10-04-2006, 11:42 AM
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Friends: 0 | <div class='quotetop'>QUOTE(JackDodge @ Oct 4 2006, 09:40 AM) [snapback]327802[/snapback]</div>Read the article. Seems very silly to me. Makes me think of market timers/technical investors tilting at windmills. I prefer to believe that the market price of derivitives does not backfeed to the price of the commodity, but if so, only very slightly to the extent it might affect oil company exploration and investment decisions. The analysis of the article is reasonable to explain an effect which adds to volitility, but it would not be correct to say that it explains a significant portion of the volitility. Derivitive trading is a gamble on the actual volitility of the underlying commodity compared to the expected volitility. Money can be made by betting on less than expected volitility, or more than expected volitility. I have a hard time believing that money flowing into derivitives adds to the volitility of the commodity itself. |
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