Oil thread.
I do not think either the vix or oil is priced correctly.
They are related to ea other.
If you trade oil or energy stonk - or hell any stonk - or any option - this thread is for you.
Consider it advanced currency 501 course - it will melt your brain.
🧵👇
I do not think either the vix or oil is priced correctly.
They are related to ea other.
If you trade oil or energy stonk - or hell any stonk - or any option - this thread is for you.
Consider it advanced currency 501 course - it will melt your brain.
🧵👇
I will build this slow - layer on layer so you can see exactly whats going on.
This is the spice.
Texas tea.
Somethin happened rite here - and its been downhill ever since.
Remember - the spice is a currency. Because its in everything, it can be traded with everything.
This is the spice.
Texas tea.
Somethin happened rite here - and its been downhill ever since.
Remember - the spice is a currency. Because its in everything, it can be traded with everything.
BUT - its priced in American Dollars.
UUP is usd
UUP is usd
Here is DXY and UUP.
DXY is a basket of currencies.
UUP is just USD.
Higher on this chart the stronger the dollar.
DXY is a basket of currencies.
UUP is just USD.
Higher on this chart the stronger the dollar.
Here is same with oil again.
The attack on oil began right here (1)
The attack on oil began right here (1)
If you understand derivatives - there is risk premium associated with underlying position.
Think of it as an insurance contract.
If there is high risk - like on your car, you keep driving drunk and crashing - your risk premium goes UP.
Same goes for derivative contracts.
Think of it as an insurance contract.
If there is high risk - like on your car, you keep driving drunk and crashing - your risk premium goes UP.
Same goes for derivative contracts.
If crazy stuff is happening with supply chains for energy, the risk premium goes up.
So you buy a "call" on oil with the idea the price is going up - and it pays big if the price of the spice does indeed go up.
You win. This is called speculation.
So you buy a "call" on oil with the idea the price is going up - and it pays big if the price of the spice does indeed go up.
You win. This is called speculation.
But lets say theres an intervention in the insurance market.
You buy an insurance policy w/the idea the price of the contract goes up. but instead, the price of the insurance contract goes DOWN.
Well, then you *SELL* that losing contract - speculating on the spice is a bad bet.
You buy an insurance policy w/the idea the price of the contract goes up. but instead, the price of the insurance contract goes DOWN.
Well, then you *SELL* that losing contract - speculating on the spice is a bad bet.
Derivitive premium is a function of the vix.
Vix goes up when there is hi perceived risk - in particular in oil.
Here is the vix vs the spice
Notice the correlation of trends and peaks.
Vix goes up when there is hi perceived risk - in particular in oil.
Here is the vix vs the spice
Notice the correlation of trends and peaks.
You can influence the price of oil by releasing the strategic petroleum reserve, and this will ease the pressure on the vix.
In 2022 they did this and thats why the line went down.
In 2022 they did this and thats why the line went down.
You can also play games with interest rates.
The vix is a function of yield spreads too - so u change that spread, you create a carry trade and it makes the market seem like a good place to invest.
Everytime that was done the vix quieted down - but it wasnt impacting the spice.
The vix is a function of yield spreads too - so u change that spread, you create a carry trade and it makes the market seem like a good place to invest.
Everytime that was done the vix quieted down - but it wasnt impacting the spice.
Heres 2023
oil vs vix vs yield spreads
March 2023 the banks blew up (thanks israel for reminding us all who runs america)
By september, US was losing the fight with oil again.
oil vs vix vs yield spreads
March 2023 the banks blew up (thanks israel for reminding us all who runs america)
By september, US was losing the fight with oil again.
Enter the SVIX and the UVIX
They are designed to muscle down the vix.
SVIX attacks short term vol (anything less than 30 days)
and UVIX attacks all long term vol (anything > 30 days)
This puts a lasso on the vix ties its legs up and ties it to a massive tree.
They are designed to muscle down the vix.
SVIX attacks short term vol (anything less than 30 days)
and UVIX attacks all long term vol (anything > 30 days)
This puts a lasso on the vix ties its legs up and ties it to a massive tree.
But oil is still hi - ya, but it would be a LOT higher if the fed didnt do this, esp with all the geopol events going on.
But these are not the only tools in the CB arsenal to attack the vix and ultimately oil.
But these are not the only tools in the CB arsenal to attack the vix and ultimately oil.
Enter foreign currencies.
In particular USDEUR+USDMXN.
Rn the peso is strong as f.
When foreign CB's buy USD debt, it makes the USD WEAKER and their currency stronger.
Think of bonds as gold bars. When they have more gold bars and we have less, they have stronger currency.
In particular USDEUR+USDMXN.
Rn the peso is strong as f.
When foreign CB's buy USD debt, it makes the USD WEAKER and their currency stronger.
Think of bonds as gold bars. When they have more gold bars and we have less, they have stronger currency.
Remember oil is priced in dollars.
What do you think happens to oil when they do this?
Thats right USD-- = impact to price of oil.
UUP and DXY normally trade together. In 2023 the CB's delinked them.
What do you think happens to oil when they do this?
Thats right USD-- = impact to price of oil.
UUP and DXY normally trade together. In 2023 the CB's delinked them.
Same chart vs oil
same chart vs USDMXN+USDEUR
same chart vs vix
same chart vs svix
(in green)
On december 15,2023, the cb's relinked dxy and uup, having muscled vix down to near single digits, foreign currencies vs USD super strong.
NOW when dxy and UUP go up, they go up relative to a castrated oil & vix market.
(in green)
On december 15,2023, the cb's relinked dxy and uup, having muscled vix down to near single digits, foreign currencies vs USD super strong.
NOW when dxy and UUP go up, they go up relative to a castrated oil & vix market.
But thats not all - there is more...
all the while these vix and currency games are going on, the fed (well jPan) raised US interest rates (1)
So now - the oil market has to contend with - extreme low vix, stronger foreign currencies vs USD
AND the USD has hi interest rates.
all the while these vix and currency games are going on, the fed (well jPan) raised US interest rates (1)
So now - the oil market has to contend with - extreme low vix, stronger foreign currencies vs USD
AND the USD has hi interest rates.
Relative from that position - *NOW* when us just raises or lowers interest rates just a little bit it HYPER whacks oil.
The fed (or jPan) can now *EASILY* control the price of oil just twiddlin with long bonds just a little bit.
Middle east massive war?
Wont matter at all.
The fed (or jPan) can now *EASILY* control the price of oil just twiddlin with long bonds just a little bit.
Middle east massive war?
Wont matter at all.
yer gun see a lot more of this in coming months...
oilprice.com
oilprice.com
SVIX and UVIX are weapons to fight oil inflation.
And they are very effective.
(1) oil
(2) dxy + svix
(3) vix
(4) oil - svix
(5) svix
And they are very effective.
(1) oil
(2) dxy + svix
(3) vix
(4) oil - svix
(5) svix
But this crush does weird things to other parts of the market.
lets examine them 1 at a time.
starting with COCO
lets examine them 1 at a time.
starting with COCO
oj
Natural gas
(pay attn to scale - its inverted)
(pay attn to scale - its inverted)
The stonk
Sugar
coffee
Remember - vix crush makes it impossible to bet AGAINST the underlying, so the underlying has a clear shot to moon.
The $ is a weapon.
The futures/ derivatives markets are weapons.
Above is how its weaponized.
Hopefully it makes sense - & u can understand why BRICS is a thing and why resource producers (oil in particular) wish for a different system.
Oh whats that u say?
PetroYuan?
ya - k
The futures/ derivatives markets are weapons.
Above is how its weaponized.
Hopefully it makes sense - & u can understand why BRICS is a thing and why resource producers (oil in particular) wish for a different system.
Oh whats that u say?
PetroYuan?
ya - k
And their stonk market.
in purple and inverted (higher on chart is lower their stonk)
in purple and inverted (higher on chart is lower their stonk)
K - now with this all fresh in your mind, the fed printed a mountain of money - in a normal world USD should have become MASSIVELY weaker.
But its the world reserve - everyone uses the dollar.
And infact, its share in trade is actually INCREASING.
But its the world reserve - everyone uses the dollar.
And infact, its share in trade is actually INCREASING.
So we create mountains of "worthless" dollars and the world uses MORE of them.
This isnt the first time.
Producers saw this and it pissed them off.
So they tried to buck the system.
pressenza.com
This isnt the first time.
Producers saw this and it pissed them off.
So they tried to buck the system.
pressenza.com
Both major oil producing nations.
Both tried to buck this system.
Both are no longer with us.
Both tried to buck this system.
Both are no longer with us.
With oil FIRMLY under control in the EU$ system, now you can attack middle east and do whatever you want.
From genocide...
hrw.org
From genocide...
hrw.org
To bombing Syria and Iran - none of it will impact oil much anymore.
Price discovery is effectively destroyed.
apnews.com
Price discovery is effectively destroyed.
apnews.com
Remember - this EU$ system is the one we stuck with until someone comes up with a better one.
Foreign CBs *MUST* buy US bonds else their currency gets destroyed (see above china).
Foreign CBs *MUST* buy US bonds else their currency gets destroyed (see above china).
Here is malaysia former PM asking why they need to buy UST (cause if he dont his currency gets destroyed)
To be the worlds reserve currency, you need very strong global financial backing.
Some of you may know who the Rothschilds are.
People like that help support the dollar buy putting their wealth into US banks.
Some of you may know who the Rothschilds are.
People like that help support the dollar buy putting their wealth into US banks.
Listen closely....
All this is inter-related....
This is a pretty heavy thread.
Sorry for that - but you are now a currency expert.
To lighten things up a little, a relevant Rick and Morty.
Now that you understand oil, currencies and Israel, this should give you a laugh....
youtube.com
Sorry for that - but you are now a currency expert.
To lighten things up a little, a relevant Rick and Morty.
Now that you understand oil, currencies and Israel, this should give you a laugh....
youtube.com
This is what SVIX currencies and bonds do to the stonk.
first they took out long dated premium.
then they took out short dated premium.
Todays rally is the short dated premium being drained.
first they took out long dated premium.
then they took out short dated premium.
Todays rally is the short dated premium being drained.
This is what SVIX currencies and bonds do to the spice.
And you can see where they drained the long term premium.
And you can see where they drained the long term premium.
So we are at war with Russia now too - proxy thru Ukraine.
Russian man Putin bad.
US has had sanctions on Russia for decades.
And Putin knows a thing or two about US...
Russian man Putin bad.
US has had sanctions on Russia for decades.
And Putin knows a thing or two about US...
tass.com
And this is *WHY* there is a proxy war with russia.
Russia got nookes.
Cant attack directly or its World War 3.
So use ukraine to enforce USD hegemony.
Thats what this is all about.
And this is *WHY* there is a proxy war with russia.
Russia got nookes.
Cant attack directly or its World War 3.
So use ukraine to enforce USD hegemony.
Thats what this is all about.
If you liked this thread and think its important that others see it (i think it is - it helps explain weird foreign policy choices) - please consider retweeting?
Extra credit:
If you wanna understand the underlying mechanics of why foreign CB's must buy US debt or their economy gets destroyed, see this very relevant video:
youtube.com
If you wanna understand the underlying mechanics of why foreign CB's must buy US debt or their economy gets destroyed, see this very relevant video:
youtube.com
And if you wanna understand why china did the BRI (belt and road initiative) - this ones for you:
It is *EXCEPTIONALLY HARD* to create a worlds reserve currency.
You have to entice the super wealthy to use it (think rothschilds) - and rn? They are quite happy with US being their lapdog with US superior military.
Maybe that changes in time - for for now? Unlikely.
You have to entice the super wealthy to use it (think rothschilds) - and rn? They are quite happy with US being their lapdog with US superior military.
Maybe that changes in time - for for now? Unlikely.
And i dont hate jews.
I hate the system they co-opted to control everything, and then run around the world creating fires that US is forced to defend and make excuses for.
I hate the system they co-opted to control everything, and then run around the world creating fires that US is forced to defend and make excuses for.
Continuing thread here:
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