TWIFO 196: THE WILDEST WEEK IN CRUDE OIL HISTORY 

  • HOST: MARK LONGO, THE OPTIONS INSIDER MEDIA GROUP
  • CO-HOST: SEAN SMITH, MD OF DERIVATIVES LICENSING, FTSE RUSSELL
  • CME HOT SEAT GUEST: RUSSELL RHOADS, EQ DERIVATIVES

ON TODAY’S EPISODE, MARK, SEAN AND RUSSELL DISCUSS:

CRUDE

  • A HISTORIC, AND DANGEROUS, WEEK FOR CRUDE
  • USO IS IN TURMOIL
  • CRUDE CAN ACTUALLY GO NEGATIVE
  • CME STARTED LISTING NEGATIVE STRIKES FOR CL OPTIONS BEGINNING 4/22
  • INTERACTIVE BROKERS TAKES $88M HIT FROM CRUDE FUTURES COLLAPSE

EQUITIES

  • THIS IS A GOOD TIME FOR SMALL CAPS. 
  • THE RUSSELL 2000 HAS A LOWER WEIGHTING IN ENERGY THAN LARGE CAP INDICES LIKE S&P 500. CONSIDER THIS IF YOU ARE LOOKING TO DIVERSIFY AWAY FROM CRUDE OIL FOR A BIT.

FUTURES OPTIONS FEEDBACK

  • QUESTION FROM JLNE: HOW THE HECK CAN CL GO NEGATIVE?
  • QUESTION FROM NEAL: DO YOU THINK WE WILL SEE NEGATIVE PRICES FOR THE FORESEEABLE FUTURE?
  • COMMENT FROM 45T$: SO WE’RE LIVING IN A WORLD WHERE THERE ARE ACTUAL NEGATIVE STRIKES FOR CRUDE OPTIONS. JESUS! WHO EVER THOUGHT THAT WE’D GET HERE?
  • QUESTION FROM PIERCE: IS THIS REALLY A CRUDE BLACK SWAN? PEOPLE THEORETICALLY THOUGHT THAT CRUDE COULD GO NEGATIVE. ISN’T A BLACK SWAN SUPPOSED TO BE COMPLETELY UNFORESEEABLE?
  • QUESTION FROM JANPECK: WHAT IS HAPPENING TO USO?
  • QUESTION FROM TMAL: WHAT DO YOU THINK OF USO AT THESE LEVELS?
  • QUESTION FROM MM87: DID THE USO ROLL CAUSE THIS?
  • QUESTION FROM DAMANATEE: IS USO JUST ANOTHER XIV?
  • QUESTION FROM BANTAM: WHAT THE HECK IS USO NOW?
  • QUESTION FROM SG90D: THOUGHTS ON THE 8-1 REVERSE SPLIT IN USO? 
  • QUESTION FROM SAMUELPBOWIE: JUST STARTED TUNING IN…WHEN DO YOU SEE HIGH DEBT US SHALE PRODUCERS START DEFAULTING ON LOANS?
  • QUESTION FROM JLC: WHY IS RUT SO VOLATILE
  • COMMENT FROM MBOTT: IT ROLLED BECAUSE THE INDEX METHODOLOGY IS, OR AT LEAST WAS, TO SELL NEAR TERM CONTRACTS TO BUY NEXT TERM CONTRACTS.  THEY DID NOT FACTOR IN THE POSSIBILITY OF THESES EXTREME SPREADS BETWEEN THOSE CONTRACTS WHICH LED TO MASSIVE NEGATIVE ROLL YIELD.  THEY WILL PROBABLY NOW CHANGE THE METHODOLOGY TO GO FURTHER OUT THE CURVE, BUT IT’S TOO LATE IMO

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