3 ms·
The article totally glossed over how the long orders were "rolled over" from one trading period to the next. This seems like a critical detail. What happens whe
by rcthompson 15y ago
The article totally glossed over how the long orders were "rolled over" from one trading period to the next. This seems like a critical detail. What happens when all the orders come due and you're holding a bunch of long orders?
Also, wasn't this on HN a while ago? Or did I see it somewhere else?
- jallmann 15y agoStrangely enough, this is a recurring nightmare of mine. I'm holding commodity futures that I forget to close out, and then one day farmers show up at my door with the delivery.
- thaumaturgy 15y agoFrustratingly, the post you are probably thinking of was here: http://www.cpeterson.org/2011/03/10/why-gas-is-so-expensive-today-hint-its-not-libya-2/ http://www.cpeterson.org/2011/03/10/why-gas-is-so-expensive-... (Aside: this is one reason why I have so little trust in the web as a long-term historical medium.) Although that article focused primarily on oil futures, it also discussed commodities futures, and specifically addressed the rollovers. Unfortunately, I neither understood it well enough at the time, nor remember it well enough now, to regurgitate it. Maybe someone else will come along with a cached copy.
- rcthompson 15y agoI think that's the one I was thinking of. I guess I followed the link from that one to this one, and therefore I remembered reading this article.
- thaumaturgy 15y agoNah; the previous version of the article I linked was completely different. For some reason, the author felt the need to take it down and replace it with links to these other articles.
- nandemo 15y agoRolling over is a routine operation. Say you hold a long position on 1 contract of X with expiry in December. At the expiry date, you simultaneously sell a offsetting contract of X (canceling out your long one), and simultaneously buy a new contract with expiry in March.