Its a mess, but there's always champions league at the end of the day

The theme yesterday in equities spilled over into the oil complex as we saw benchmark crude prices come off a touch even as we approach potential OPEC cuts. As SFOT peeped into his portfolio, he is most annoyed at his timing of dipping his toes into the integrated oil majors a touch too early. However, revisiting this trade he is likely to hold on to this for now as refining margins are still strong and the likelyhood of equities having a bouncy next few months are fairly high.

In WTI though, he is beginning to notice a similar play emerging in front end time spreads, i.e April/May09, as funds, traders, individual etc tries to front run the usual monthly roll coming up in about 3 weeks. Although a fairly microscopic trade, it will remain a profitable one as Cushing stocks stay high and more importantly, as long as the fund rolls are there to be exploited, they will be spared no pennies. For guys who want to benefit from a '+ve roll' type trade, any form of shorting front end WTI is essential a surety, however SFOT still prefers to be short WTI-Brent spreads, rolling May into June when the roll yield is attractive.

Volatility have remained high and has indeed climbed all week . The VIX is also climbing, although it is still very far from it peak of 80. However, WTI vol following the VIX when flat price has effectively done nothing for 1 month bemuses me. Whether volatility here is too high or not remains in the opinion of the reader but it will come a point where being short strangle will begin to look interesting. 30/60 strangle perhaps in M9?






Now its the big day today for champions league. SFOT just received his tix to the Emirates tonight in the hope the minnows Arsenal can have a better game than a 0-0 draw with Sunderland. For the rest of it, not that Mourinho ranks highly on the favourites list but Man Utd ranks right on the top of SFOT's hate list, hence a big result for Inter will be very welcomed. Kick off!