Finding values in calmness

A rather short post today as SFOT tries to refocus his thoughts on the several forces impacting oil complex this year. So, crude prices has been relatively dull of late. This favours option sellers collecting theta and small intraday trading, hardly sufficient to fill up a day of work. Would SFOT join the crowd in collecting theta? Probably not at such low volatility levels as risk reward isn't that great.

Brent Vol Mar12.

Afterall, there are better value plays to look at. For eg, the Wti-Brent spread. The tightening in the last few month have been driven mostly by talks of enbridge pipeline reveral which finally will take crude out of cushing, providing a way out. However, given this has recently been put back until at least June this year, we are not due a reveral of fortune for wti just yet. Significantly, we are now going to witness a build in cushing stocks for a while. This shall depress prompt WTI vs Brent spread but perhaps create an opportunity to get long of this spread on a deferred basis. Dec12 perhaps?

Dec 12 Wti-Brent spread