Huge loss on oil Futures sinks SemGroup

Written on July 22, 2008 by OptionsRopeaDope

Don’t feel too bad if you slip up sometimes on risk management - you could have lost $3.2 billion.

The Tulsa-based SemGroup shorted NYMEX crude oil futures to hedge against a decline in the value of the oil it purchased as part of its 500,000-barrel-per-day trading business, according to court documents, before surging crude prices forced it to recognize billions of dollars in losses on futures positions.

Wow! Always limit your downside :)

On the trade front, I feel fortunate for sitting out a couple of days. Being cash means I didn’t panic or have to adjust. I did look at a few new trades but saw nothing that jumped at me, except for a calendar on EEM that I’ll cover later.

Popularity: 11% [?]

If you enjoyed this post, make sure you subscribe to my RSS feed!

Other posts like this one:

  • The World’s Most Liquid Futures Contracts
  • Using the VIX to mitigate volatility risk
  • Dan Sheridan’s Iron Condor Opening rules
  • Ouch, That Hurt
  • What I am holding on to into Expiration Week

    • Category Posted in Misc

    RSS feed | Trackback URI

    Comments »

    No comments yet.

    Name (required)
    E-mail (required - never shown publicly)
    URI
    Your Comment (smaller size | larger size)
    You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong> in your comment.

    Trackback responses to this post

    Copyright (C) 2008, OptionsRopeADope, LLC All rights reserved. U.S. Government Required Disclaimer: Commodity Futures Trading Commission.*Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.