Here’s how to double your money on crude

MUMBAI: Even as crude tumbled to a sixyear low of $34.67 sixyear low of $34.67 intraday Monday on US-based Nymex, commodity arms of leading brokerages like Motilal Oswal advised clients to build risky, bearish bets in crude futures on commodity bourse MCX for almost two-fold returns possibly this week itself.

The logic is that crude could tumble to $32 a bbl or even $30, levels last seen in 2004 on Nymex. MCX crude tracks that on Nymex. Intraday, when oil recovered from a six-year low to Rs 2,380 a bbl, Kishore Narne, associate director, Motilal Oswal, advised shorting the contract (100 bbls) on MCX to pocket up to Rs 200 a bbl as early as this week-end, or a potential Rs 20,000 at contract level on margin of Rs 21,104. That’s a gain of almost 95%. However, considering that crude is heavily oversold, he advises trading with a stop loss at Rs 2,460/bbl.

On Nymex, active oil options see maximum trader focus at the $35 strike put, going by open interest of 38,678 contracts. This is followed by the $30 strike put, which had provisional OI of 14,777 contracts. Open interest or outstanding positions on the $35 strike on Nymex fell by 3,713 contracts to 38,678 contracts, while intraday price rose to $1.42 a unit from $1.37 on Friday.