After promising myself that I wouldn't get sucked back into trying to make money through trading, I broke that promise and decided to buy three contracts of RBM21. I had the opinion that gasoline prices will increase between now and next June. This may be correct, but I'm now down $14,000 because of the recent decline in prices. I bought on 8/21 for 1.3922.
Yea but not when I bought it. I still think it will pick up before next June, but hopefully I don't get margin called before then.
ok. I see that when you bought it in Aug 2020, the price was already in the consolidation phase, after it has gone up in Apr 2020.
TA point of view, price is between 1.2657 - 1.3097 Looks like you bought higher and would sell higher once we get a vaccine.
I'm not a huge fan of TA. Yes, I was betting on demand increasing once a vaccine is released. There was some bad statistics released by EIA since my purchase.
Have you considered using a spread rather than outright? perhaps short a near month and long the June 21, perhaps a spread between unleaded and heating oil or unleaded/ crude? Just throwing some ideas. On the daily chart RBOB still looks strong to me but due for a pullback. Just sharing some ideas....
I went into it with the idea that I didn't think it would go beneath it's low on 6/26 (and certainly not the low of 6/12). Hard to believe it's already come close. I honestly still think my original bet is correct, that it will be high by next June. I'm hoping that contango doesn't hurt me. I didn't do a spread because it was an "all or nothing" bet. My margin call would be at a loss of $17,100. At which point I would have to decide to risk more or call a loss. I'd hate to call a loss just to end up being correct by next June.
Personally, I would have done a Crack Spread - it's a better expression of Gasoline value and the fact that the entire world is awash with crude oil supply it would have given you fantastic downside protection. As of today's close you'd be marking up nicely after an 8/21 purchase of the M21 Gasoline Crack. In fact, since 8/21 you would have taken zero heat on the trade.
October '20 Crude Oil Future (red and green candles) versus October '20 Gasoline Crack (dark blue and light blue bars). This isn't June '21, but the concept is the same.