Andrew corridor, Citigroup’s quarter-billion-dollar oil trader

February 28th, 2008 | Category: Oil

The Wall Street Journal [subscription required] presents a fascinating study of Andrew J. corridor, a Citigroup Inc. (NYSE: C) trader who made $250 million in 2007 due to a successful bet beginning in 2003 that anticipated a change in the way the world valued oil. And his money and attitude have put him in some street fights with his Connecticut neighbors by his $100 million art collection.

What was Hall’s trading insight? In 2003 he concluded that long-term and short-term energy prices would soon abandon their historical relationship with one another. For more than a decade, oil had ranged from $10 to $30 a barrel. But he concluded that demand growth — driven by China and India — would outstrip supply.

He bet on

that trend by investing in the extremely long-term market in which traders buy and sell oil to be delivered years in the future. Back in 2003, oil for future delivery was as much as 20% cheaper than oil in the current — or “spot” — market. corridor told traders to bet that that relationship would reverse itself. He bet on that by buying all the oil futures he could for delivery three to five years out along with “call” options that gave him the right, but not the obligation, to buy oil at lower prices in the future. .

Continue reading Andrew corridor, Citigroup’s quarter-billion-dollar oil trader

Original post by Peter Cohan

Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.