Goodbye Larry Pt. 2 and CPI Numbers

The Summers Step contract expired today at 100 meaning for us it paid off. With that contract I was able to enter with an average cost of 57.6 and scaled out at 70 and up. By the time it expired I was only open for 5 lots. I had the rest of the postion closed with pending orders. Very simple.

CPI Strategy

CPI numbers are coming out tomorrow morning (for Jan) with consensus at +.4% vs last months -.1%. The decline in December CPI was nearly entirely due to change in the price of crude. The Tradesports contract is on the Raw figure as the Core CPI barely moves.

Liquitity is lacking on this one constantly but if we can get in at good odds this one will pay by fading the consensus. Last weeks PPI showed an increase and although the pass through relationship between producers and consumers fell apart in Decemeber it was more of a one-off than a new trend. What this is a bet on is oil. While the energy weight of the CPI is less then PPI the previous month's move shows our expectations are realistic. The contact goes up to .6% on the high so we could see the whole board pay off.

The trade: If you can get the -.2% at less than 90 do it. Buy up .4% at 60 or less.