George Soros made a bet that the Bank of England would not succeed in controlling the exchange rate of the British Pound versus the US Dollar. His bet was correct, the GBP plummeted and he closed his short position with a significant gain (understatement). But this was over 20 years ago .....
You cannot short a currency. Currencies are traded in pairs, which means that you buy one currency and sell another one. Currencies are always traded on margin. Stocks can be shorted. Usually the impact on the share price is negative. However, there is a risk that some market participants drive market prices up thus forcing short sellers to cover their stocks at much higher prices. The short seller also has the risk that a sudden takeover bid drives prices up.
The ultimate short squeeze was the panic buying of short sellers that drove the price of Volkswagen to over $ 1,000 per share. Volkswagen became the most valuable company in the world for a few days.
I was curious what some of you phys guys thought about this new contract released by the CME?
CHICAGO, March 4, 2015 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, LOOP LLC, operator of the largest privately-owned crude oil terminal in the U.S., and NEO Markets, Inc., a leading online marketplace for U.S. physical oil transactions, today announced they had reached a definitive agreement to develop the first-ever physically delivered crude oil storage futures contract. The new LOOP Crude Oil Storage futures contract will begin trading on Sunday, March 29, 2015, for trade date Monday, March 30, 2015, pending all relevant CFTC regulatory review periods.
This new contract will provide market participants with an innovative, exchange-traded futures contract based on crude oil storage capacity at LOOP's Clovelly Hub in Louisiana, beginning with the May 2015 contract month. Each futures contract will represent the right to store 1,000 barrels of crude oil at the hub for a specific calendar month.
The new storage contract is expected to enhance the liquidity of the existing NYMEX Gulf Coast Sour Crude Oil futures contract, which is physically deliverable at LOOP and will be renamed LOOP Gulf Coast Sour Crude Oil futures. As part of the agreement, CME Group will also broaden the specifications of this sour crude futures contract to include Poseidon, Mars and LOOP Seg 17.
"As global crude oil supply and demand dynamics continue to shift, CME Group remains focused on meeting the risk management needs of our energy customers," said Martin Fraenkel, Managing Director, Global Head of Energy Products, CME Group. "We believe this innovative new solution will help customers manage their physical crude storage price risk, while enhancing price discovery and access to short-term storage capacity along the U.S. Gulf Coast."
"We are pleased to be providing the physical storage capability for this ground-breaking new storage futures contract," said Tom Shaw, President, LOOP LLC. "LOOP's reliability record, unparalleled market connectivity, extensive supply of medium sour crude and significant storage capacity provide the market a unique storage opportunity on the Gulf Coast."
"Together with CME Group and LOOP, we are bringing to market the first-ever storage capacity futures for crude oil," said J. Robert Collins, Jr., Co-CEO and President, NEO Markets, Inc. "By offering storage rights to a broader market through these new futures contracts, we expect to provide greater transparency, ease of access, liquidity, flexibility and security of supply for companies dependent on Gulf Coast oil deliverability."
NEO Markets will be hosting monthly auctions of physical LOOP Sour crude oil storage contracts on its NEO Trader platform. Following the auctions, subsequent over-the-counter transactions can be negotiated via the NEO Trader platform and NEO's voice broker services.
Both contracts will be available for trading electronically via CME Globex as well as submission for clearing through CME ClearPort, and will be listed by and subject to the rules of NYMEX.