Goose06 said:
Untimed Down said:
nu awlins ag said:
Premium said:
So what effect will Harvey have on oil and gas? Oil isn't jumping at all...
Traders have been buying up gasoline and selling crude.
Which is a great trade.
Some of the traders are making this trade, the other half are making the reverse trade. Trading is a zero sum game...
That's a great point, but don't limit it to trading. All commercial activity is a zero sum game, isn't it? Somebody extracts a profit from somebody else, right? It all depends on how big you want to make the circle of who sells and who buys.
Look, the poker game at your local country club is a zero sum game -- winners extract value from losers in a straight up transaction in a well circumscribed universe of participants.
Any commodity trade is a bit more complicated, largely because of valuation of risk for each market participant.
The guys making the reverse trade, in this case, might do so to mitigate risk inherent in their underlying position.
I can guarantee you that the guys on the back of the crude for gasoline trade didn't enter into the trade just to give their counterparties money. Somebody bought risk and gained value, somebody derisked and gave value. The two aren't mutually exclusive at all.