1,001 Perverts, Terrorists and Hedges

Some quick updates here...

First up, Haus of Hak has surpassed the 1,000 visitor mark:

I have to reiterate what I said when this site passed the 500 mark: you, my reading public, are an international bunch of abject savages, convulsing with all manner of rank perversions—especially the 9% of you that come from “Unknown Country.” 1


You know who you are. And so does Jesus....

-=The Mystery Reader=-

Actually, while we’re on the subject (of rank perverts, not Jesus), I’ve become curious and paranoid about one reader in particular. See, the counter on this site tells me the city, country and partial IP address of all visitors. Don’t panic, I can’t figure out who you are with that information (don't care, either)—and all websites get at least that much data about each of their viewers.

But there’s one Haus reader in particular, someone from around Blackpool, Lancaster, who’s starting to freak me out a little. This person reads so christforsaken much Haus content that I’m beginning to think it’s The Cops.

OK, sure: I might have nicked an F1-themed JPEG or two from here and there around the web, but my understanding is that since I’m not making any money with all this, then it’s all kosher. Yes?

Anyway, if that mysterious reader could send me an email or something to assure me that it’s not a massive conspiracy to take me down for Agitation and Thought Crimes, I’d sure be grateful. And thanks for reading, by the way!

On the other hand, if you are John Law, then you’d better open your ears and listen up...and listen good, boy:

You'll never take me alive, you facist, pig-fucking bastard!! ²

-=A Light, Sweet Iran trade=-

Speaking of sticking it to the Man, Iran and the West seem to be heating up the tough talk more and more these days. The Financial Times recently handicapped the likelihood of War at 25%. That seems high to me. A strike on Iran would probably mean WWIII and likely wouldn’t solve the nuke/mad ayatollah issue over the long term.

I’ve looked at terror-related financial co-movements before and liked the dynamics. Now, my advice would be to short the tradesports.com contracts on a pre-DEC. 06 US/Israeli strike on Iran (@ $20+), and hedge it with a long position in Dec. ’06 Oil > $67.50 contracts.

That way, if we do attack Iran and you lose out on the short contract, you’ll make up for it with the oil ones, since oil would probably go to triple digits in such an event. Most likely, you’ll win on both contracts anyway.

Check out the charts:

Price for US/Israeli Overt Air Strike against Iran

Price for Light Sweet Crude Oil Feb07(G7) Futures Year End 2006


Note that the price essentially represents the market’s perceived % likelihood of the outcome in question coming true. Also, it would be hard to do the Iran trade in size because of the lack of liquidity. For the oil you could just use normal contracts, and would probably be better off. Here are the details of a hypothetical trade:

Risk/reward for selling 500 Iran strike contracts @ $21.6
Risk: $3920
Reward: $1080

Risk/reward for 1000 of the oil > $67.50 contracts @ $64
Risk: $6400
Reward: $3600

If the US and/or Israel strikes Iran, you lose on the first and just about make it up on the oil. If there’s no strike, you get the $1080 for sure. And as long as things stay tense, you’ll almost certainly win on the oil.

Basically, it’s like betting on the world staying a fucked up place. If the world suddenly gets better before the end of the year, I’d obviously keep the Iran trade and reverse the oil one.

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Footnotes:
1. This information may be speculative, and should under no circumstances be construed as true, even though it probably is
2. Just kidding....See you in Gitmo, Lard-Ass