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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (85433)	2/15/2009 1:19:17 AM
From: sandeep	Read Replies (1) \| Respond to of 94695

ftalphaville.ft.com

To: GROUND ZERO™ who wrote (85433)	2/15/2009 3:26:15 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

I see that has been answered. In general, cost to carry oil and interest rates should determine the curve slope, but this one is so steep I am sure the arbs can make a ton by buying spot and delivering it into futures. Their profit is determined by cost to carry oil vs contango and interest rates (cost to borrow money). You can still make money in the ETF, but their profit is your loss. If everyone of the arbs has a poor credit rating, it's your loss too. I wonder if that's the key to it - if it was so profitable for them, why does steep contango exist? -g-