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LeroysBoots 4:33 Sat Dec 26
Wolves of West Horndon
Anyone hear about this !?!

A group of Essex based oil traders who collectively (9 of them ), made £491 million quid in 1 day !i

Read an article on them today

One paragraph made me smile

"They live in large houses with all mod cons, drive flashy motors and holiday in Marbella. Spend their weekends playing golf and watching West Ham"

Mostly young kids, early to mid 20s...WTF !!!?!!!

Replies - Newest Posts First (Show In Chronological Order)

goose 10:50 Sun Jan 3
Re: Wolves of West Horndon
FYI take a look at the chart, it didn’t close as it’s lowest point. The closing price for that day is much higher than the days lowest price.

goose 10:48 Sun Jan 3
Re: Wolves of West Horndon
You said they were able to influence the price because of the thin or illiquid market.

The market wasn’t illiquid.

It traded record volumes that day, and about average the previous day. The crude oil market is the largest traded commodity on the futures market - its far from illiquid and was far from illiquid on that day.

Capitol Man 10:00 Sun Jan 3
Re: Wolves of West Horndon


goose 9:06 Sun Jan 3
Re: Wolves of West Horndon

Again goose - you are clueless as to how the settle is reached. You clearly have zero knowledge of what you are talking about.

The volume of trades over the day is irrelevant btw - this is the part you don’t seem to be able to grasp.

Again here is the nub of the issue. Did they just ride that market price down or did they conspire to ditch enough contracts in the minutes leading up to the close to be the ones depressing the price knowing that the more they could drive the price down the larger the profit would be.

The dominant entities in most markets have the power to do this which is why there are laws against it.

There is not enough public information to know the outcome of this but the abnormal functioning of the market on that day indicates something was amiss.

goose 9:06 Sun Jan 3
Re: Wolves of West Horndon
Keep going Capitol, you’re just making yourself look silly.

You keep mentioning ‘thin’ volumes when the 20th April was the biggest volume trading day of the year for crude oil. Almost double the preceding and following days.

bruuuno 3:46 Sun Jan 3
Re: Wolves of West Horndon


goose 11:42 Sat Jan 2
Re: Wolves of West Horndon


Clothing company = Saturday job in burtons

Capitol Man 1:04 Sun Jan 3
Re: Wolves of West Horndon
Shush now goose. Your mouth is writing cheques your brain can’t cash. Maybe stick to the sewing machine.

goose 12:57 Sun Jan 3
Re: Wolves of West Horndon
Thanks for simply explaining the thing me & BP both said they were doing but you said they weren’t.

Cheers.

Capitol Man 12:53 Sun Jan 3
Re: Wolves of West Horndon
I’ll try to put this in the simplest form possible for you goose.

It’s going to come down to whether they can prove there was an intent to manipulate the price to their own ends.

Were they just riding the market down and it profited for them, or did their own specific actions in dumping trades in the final two minutes before the close effectively push the market down a further $25.

Capitol Man 12:48 Sun Jan 3
Re: Wolves of West Horndon
That being the key point here - did they just take a position and execute against it or did they act specifically to drive down the settlement price of the May contract?

Hard to prove though.

goose 12:47 Sun Jan 3
Re: Wolves of West Horndon
So they did exactly what BP was saying.

They sold because of the market signals. The widely published market signals. Good luck proving otherwise.

Just like trading places.

Capitol Man 12:39 Sun Jan 3
Re: Wolves of West Horndon
‘’declined more than $25 a barrel during the last two minutes of trading”......

Capitol Man 12:37 Sun Jan 3
Re: Wolves of West Horndon
Yes, I know how they were trading. The point is did they act to deliberately force the price down in the lead up to the close and was the volume thin enough for them to set the price.

This is the action filed against them

https://classactionsreporter.com/wp-content/uploads/Vega-Capital-London-Manipulation-of-Oil-Futures-Prices-Compl.pdf

On April 20, 2020, at least a dozen traders associated with Defendant Vega Capital worked together to aggressively sell May 2020 WTI futures contracts and other related instruments for the purpose of depressing the price (including the settlement price) of the May 2020 WTI futures contract. This concerted selling effort put downward pressure on the price of the May 2020 WTI futures contract.

Britannia Pub 12:25 Sun Jan 3
Re: Wolves of West Horndon
Buying at market and selling the closing price. Both form part of the same contract and the only thing that changes hands is cash. Hence Cash For Difference or CFD for short.

Capitol Man 12:24 Sun Jan 3
Re: Wolves of West Horndon
But then you get into the situation that they were potentially selling specifically drive the settlement lower. Did they essentially ditch a relatively significant volume of parcels in the last few minutes of the day that drove the price lower. Regulators can look at the timing and volume of trades to see if that was the plan.

If they just took a position on negative prices then that’s one thing.

If they materially had an effect on creating that negative price at close then they are potentially exposed to manipulation charges.

goose 12:21 Sun Jan 3
Re: Wolves of West Horndon
Capitol do you think every day trader takes delivery of the commodity they trade?
They were trading CFDs.

Britannia Pub 12:10 Sun Jan 3
Re: Wolves of West Horndon
Either I never explained it very well or you may not have read it properly. The scenario I laid out would have left them with a flat position at the end of the trading day. They sold into the prevailing market during the day and at the same time as they sold they entered into a buy contract at the closing price. Net position is flat and any profit or loss would be locked in once the closing price is known.

Capitol Man 12:04 Sun Jan 3
Re: Wolves of West Horndon
BP the issue with that scenario is that they would essentially have been left holding contracts with no access to storage - although it’s not really physical delivery any more they would still need to work that out financially.

I suppose without seeing the transactions we are just speculating.

Goose - sorry but you clearly have no clue what you are talking about.

Britannia Pub 11:48 Sat Jan 2
Re: Wolves of West Horndon
“If you have contracts that are written on the settlement price or a basis to the settlement price and as the market comes to a towards a close and you ditch (or in this case pay people to take) sufficient contracts to drive the price significantly lower you are effectively manipulating the settlement price to your own advantage.”

In the scenario I laid out they would been buying contracts at the settlement price so would have been bidding the price up. There just happened to be more sellers than buyers.

I reckon they’ve taken a punt basis the information the exchange put out and expected the settlement price to be lower than the trading price during the day. They probably had a good idea of whether the speculators were long or short the spot month from the open interest information probably published by the exchange and contacts around the market. They struck lucky because there was panic selling on the close so they bought at a negative price.

goose 11:42 Sat Jan 2
Re: Wolves of West Horndon
I’m well aware how the market works thanks. As a clothing manufacturer we trade cotton all year round.

The price of a commodity of such size would not be moved by such an extent by so little volume.

Capitol Man 11:36 Sat Jan 2
Re: Wolves of West Horndon


goose 11:27 Sat Jan 2
Re: Wolves of West Horndon

As I said goose - you don’t know what you are talking about.

On a futures exchange the price fluctuates in real time on the most recent transactions. If there is not much trading activity a relatively light volume of trades moves the price.

As it comes to the end of the day they take an average price of the last few minutes, I can’t remember what that period is, but you can find that in the exchange platform, and come up with an end of day price, and as the front month rolls over, a settlement price for the next month’s package.

You are trading on a snapshot of the price at a given moment in time, not a volume weighted average of all the transactions.

goose 11:32 Sat Jan 2
Re: Wolves of West Horndon
Average traded volume is about half a million a day.

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