Allow me to preface my post by stating that I know nothing about the market. It seems obvious to me that the official market position is that the price of crude will not shoot up. Many of you posters have posted excellent arguments that the price will shoot up dramatically and soon.

I might be prepared to gamble a few dollars on buying oil futures but I don't know how or whom to contact. Any advice would be appreciated.

-- Bill in South Carolina (notaclue@webtv.net), December 12, 1999

Answers

If you don't know anything about Futures, STAY OUT OF IT!!! If it goes against you, then your broker will be asking you for more money! Then you will lose even more than you have invested!

A better bet would be to buy Stock Put Options. They will make you money when the Market crashes. If it goes against you, you cannot lose anymore than you have invested.

-- freddie (freddie@thefreeloader.com), December 12, 1999.

Bill = email my address - I and a couple of seasoned futures/options guys are buying crude call options.

These, if they go above the strike price, allow you to liquidate a futures contract.

e.g. I have 10 march $35 crude call options, which expire mid feb.

If crude goes to $50, this nets %15,000 per contract or $150,000.

BUT - NYMEX needs to be up, the banks need to be up, your broker's system needs to be up etc. etc. - it's a gamble. But the $1,000 I've staked will be just that, a $1k loss if I'm wrong...

Stay away from futures if you don't know what you're doing, and Freddies puts are an excellent choice too.

-- Andy (2000EOD@prodigy.net), December 12, 1999.

Hey Bill,

Here's an idea for a pretty risk free way to make a few bucks (I'm not kidding), you won't have much leverage and won't get rich doing it, but there's the potential for a pretty good payoff, with almost no risk at all. You'll need a garage, a shed, or some other place for storage.

Go to WalMart and buy a sh**load of cases of engine oil of commonly used brands and types. After Jan. 1, you'll know for sure if there are supply disruptions. If not, just return the oil for a refund (save your receipt). If there are problems, you can sell it for a profit, though you may have to do this on the black market if some type of rationing goes into effect.

Bonus: If you want lots of leverage, use your credit cards and get one month of free financing.

-- Clyde (clydeblalock@hotmail.com), December 12, 1999.

Andy,

Any particular web site that can help us further our education on futures and options thatyou would recommend??

-- y2k dave (xsdaa111@hotmail.com), December 12, 1999.

Bill:

Your question sounds like a cartoon I saw a few years ago. This investment guy is reading the Wall Street Journal, the banner headline of which read, "How to Profit from Armageddon."

The point being, if Y2k is a 7 or above, it isn't going to matter.

-- elskon (elskon@bigfoot.com), December 12, 1999.

Not really y2k dave, do a search under www.dogpile.com on options and futures and you'll get some useful info.

I use www.Lind-Waldock.com in Chicago, the catch is you need $5,000 to open an account and place some trades. They have a pretty good site and info. packs. Good luck.

-- Andy (2000EOD@prodigy.net), December 12, 1999.

Thanks Andy.

-- y2k dave (xsdaa111@hotmail.com), December 12, 1999.

Yeah, the calls are a good call. You've predefined your risk. I second Andy's notion that if you know nothing about this market you shouldn't even consider playing. At this point, I am concerned about the emergency nationalisation of the industry should this turn out to be a fubar. For instance imagine how the stock market would respond to 40 dollar crude oil and it's inflationary impact! Yikes!

Things may get very ugly next year as all of the boneheaded oil executives realize that they never should have listened to the IT guys in the first place. I've said it before and I'll say it again the oil industry has a horrific track record with major IT projects. Probably worse than the norm.

-- Gordon (g_gecko_69@hotmail.com), December 12, 1999.

Earth to Bill, Earth to Bill, this is not about profit. Repeat, this is *not* about profit. Over, out, and wishing that we could give you a quick brain transplant.

-- paul leblanc (bronyaur@gis.net), December 12, 1999.

Right on, Paul. It has become wearisome to witness the greed, even in the face of yet undefined difficulties for the people of this country and the planet. It sickens me to see such narrow minded, materialistic ambition when we could well be on the brink of disaster.

Want an investment tip? Get on you knees and invest some time praying like crazy.

-- TA (sea_spur@yahoo.com), December 12, 1999.

Despite the vulgarity of making money in times of despair and fear, I will in a small way be joining the ranks of others who do: Auto makers, Drug manufacturers, Arms makers, Textile factors, Doctors, Hospitals, even Undertakers for God's sake. Try having a fatal desease and have to pay through the nose for your medicine and doctors. Is it ok for these people to become wealthy at the expense of sickness, misery and death?

I think it's ok for me to try and make some money out of the mess that I had no part in creating, and apparently so do some of the other posters to this thread.

If they whole mess turns out not to be Armaggedon, wouldn't it be nice to have a little money waiting for you? and if you don't make it, how about providing for your family?

I see no down side to this. I will not be charging sick and hungry people money for food or medicine. If you like, I will forward your share of expense for any profit I make. With 6 Billion people in the world, what do you think your contribution will have been if I realize $150,000.00? You guys figure it out. I may even over pay your contribution by a million or so and send you each a penny.

When I was a cop in LA, and someone would tell me how they paid my salary, I would often put a penny in their shirt pocket and tell them that we were now even.

-- Bill in South Carolina (notaclue@webtv.net), December 12, 1999.

Paul and TA,

If you fundamentalist anti-capitalists think speculative investments and profits are evil- Thats fine. Don't play.

But where would all the successful U.S. upstart business ventures be if everyone had your attitude? Go to Iran or Cuba if you want to see your anti-capitalism anti-market bunk in action.

I trade energy futures for a living. I'm proud of it because its about the purest form of entrepreneurship and very few succeed.

For Andy and all you other evil profiteers, I'd advise Feb (expiring Jan 14) or March (expiring Feb 16) on the crude, (about a week later on the products). The further out you go the more you'll have to pay- more Theta.

Options are like insurance. The more you pay, the more 'coverage' (or evil profits) you'll get when the move goes your way. Don't worry too much if you are getting the right strike. The more you pay the more the options valuations will keep pace with the underlying futures contracts. The real cheap ones are great if you're undercapitalized but they don't deliver much bang until they move up closer to their strike price. The market should be efficient enough that you don't have to worry too much about valuation formulas but here's a caveat: I don't know if there's a lot of unexperienced money or what coming in but NYMEX option quotes have been screwy lately and not as efficient as usual- especially last week. Volatilities are up there, as they should be, but there were occasions last week when you would have been hosed by entering a market order. When I'm buying options, I always get a bid and an ask price. This spread between the bid/ask will tell you how liquid (efficient) the market is. My floor broker doesn't know if I'm buying or selling when he's quoting me (keeps him honest). Then I generally offer a bid right between the two quotes (bid/ask).

Hopefully you have a commodity broker who has the software to evaluate volatilities and valuations. Or find where the options settled in the previous session (Wall Street Journal or online places) and figure accordingly. It does take some smarts even if you're only buying options. I'm not gonna get into anything more complex.

Gasoline and heating oil have been underperforming relative the crude lately so I like heating oil and gasoline options over the crude. The heating oil is so cheap that refiners are close to breakeven economics in some locales. Of course the heating oil is more weather related. It looks like it might get back to normal or even a little below normal temps for the week of the Dec 19th. If cold temps develop these heating oil options will scream. If it dosen't you're gonna be better off with gasoline. As I said in the previous post- diversify!. Different strikes from 5 to 10 cents out of the money (on the products) and mix up with the crude, gasoline and heating oil if you can afford to do it. If we get refining disruptions on the rollover, you'll be glad you're in the products too.

Don't invest any money in options unless you can afford to lose it all. I'd also advise getting in early next week. If you pussyfoot around you'll end up as pennyless as our friends, Paul and TA.

Good Luck!

-- Downstreamer (downstream@bigfoot.com), December 12, 1999.

Amusing, downstreamer. You don't have to be anti-capitalistic to find your approach to life disgusting. And, you don't have to be pennyless. Quite frankly, I am neither, and my family is quite financially secure. My income has come from education, many years of hard work in a technical profession, private business ownership and service to my country.

However, the purpose of this forum has nothing to do with profiteering. It doesn't matter to me what money ends up in your pockets, but if all you live and stand for is the almighty dollar, you will die a poor man.

Now, go find yourselves somewhere else to play -- this is not a playground for one dimensional boys.

-- TA (sea_spur@yahoo.com), December 12, 1999.

Can't resist adding my two cents....maximizing profits is what got us into this mess.

-- Michael (mhgentry@prodigy.net), December 12, 1999.

Everyone seems to be missing the entire point of the futures options.

Sure, now it's used by gamblers.

But the original idea was to provide a form of insurance for people who had to deal with the futures market. Options will also provide insurance for people who own stocks in a volatile market.

So, it you're unsure of the future of your job or industry, a small position in the commodity futures or stock options market is a prudent response.

IOW, an option to buy oil at $30-$50 or to sell Microsoft (or stock of your choice) at $80 could be prudent insurance for loss of income.

-- Dean -- from (almost) Duh Moines (dtmiller@midiowa.net), December 12, 1999.

funny ain't it, you won't hear any emergency executive orders to halt trading in Cisco, Yahoo or some other tech stock with a 1000 to one p/e. That's the "good inflation"...but ultimately it poses as much systemic risk as $50 crude. If we get lucky to have a panic spike to $50 crude, however brief or unwarranted, I will take profits--I think it could happen very quickly and there would be a window of opportunity to cash out before the gov. called an emergency nationalisation--we're. supposedly the chief advocate of "free mkts"...so I'm not too concerned about the gov. Of course if banks close,exchanges close, and we're all sitting about in stone age conditions trying to figure out where to throw out our bucket of shit.... then we might as well all take the gas pipe (if there is any) or pop a cyanide capsule.But I cannot live or trade thinking like that- As for me, I have been trading commodities for my own account-(never been a broker) since 1972-I'm a semi-retired real estate millionaire. I currently have 30 Feb and 30 March $35 crude oil calls--5 $30 Aprils and 15 Dec2000 $30s--if Y2K is a non-event, I will be very happy to hold my Dec. calls because I think we will have the greatest speculative orgy we will ever see with 500 and 1000 point up days on the Dow--central banks will go all out to keep the bubble going and we will see, to the surprise of all, rising inflation, equities and interest rate--the world-wide bubble is simply too big to fail (even though it will some day)--I also have 75 June $400 gold calls bought at $50 each and 100 Dec 2000 $410 gold calls bought at $250 each-- all we can do is place our bets on the table and let the croupier spin the wheel--I saw the open interest on the crude call options--over a million calls and over a million puts- we aren't nuts(well balanced sentiment)--we are in a vast casino and a million customers are betting with us and a million against us--one group wil scoop the chips off the table--Ladies and gentlemen, les jeux sont faits,

-- Thaddeus Q. Hargraves (clairejoie@aol.com), December 13, 1999.