Traders Make Money as Oil Prices Go Nowhere… WSJ

by Jim Colburn • Sunday, September 17, 2017

From Stephanie Chang, WSJ:

“Many traders are adapting by pursuing what is known on Wall Street as a mean-reverting strategy, generally one that wagers prices will fall when oil is above a certain level and rise when it declines below a threshold.”

 


There is always a “however”:

“Even practitioners of the mean-reversion trade warn that it can be hazardous. Such trades typically make up a small portion of Mr. van Essen’s fund activity, he said, but his use of it has increased to more than 50% over the past year.

“I don’t think it’s going to last” more than another year, said Mr. van Essen. “Commodities are changing and you have to adapt.””

 

 

 

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