Weather continued to add and market started talking about biggest draw ever and what price point we will need to fix it
It seemed that $5.00 OI which was only 2 tics pre-long weekend was still on the books and market was caught short Feb and March calls
We talked about it, when an option with 2 tics reached 50 cents, when the market hit $5. It is a huge move
The OI on Feb $5 and $6 calls went down as it got closed by both longs and shorts taking profits and losses
Just before OPEX on 01/26, activity on Feb 7.00 increased
On Opex, CME had multiple problems and traders were either saved or annoyed by these $7 calls not going ITM
The other annoying part about this rally was the most common held belief that once Hub goes into double digits LNG will start to back off and LNG barely budged especially at VG facilities even when cash was upwards of $50
Market Conditions
Now, with SALTs running low and production still not back to where it was before, market is trading in a panic mode even with warmth projected after the NE cold shot
Cash and Balmo rallied today on an FM and Futures and vol immediately took off. Calls went immediately bid and puts got sold, all within a short time, only to back off later
For a change highest volume was not on March $3.00 puts and instead March $5.00 and $6.00 calls traded the most
Mar/Apr 1.00 calls are back to 3.5 cents and even V/F -0.75 calls traded 0.055~
As can be seen in the skew chart, calls and vol were bid and puts were softer for bal year
Price & Volatility
Back vol is making a come back, with JV 28 $4.00 calls lifted for 28.5 cents
If you are getting tired of all this and don't want to be a farmer, there is a new option in the market now. Rent your body to AI agents
Someone clever launched a website where the MoltBots (OpenClaw bots) can rent a human and within days 90,000 people have signed up
Vol & Skew Analysis
We have another product update. On the Spreads Matrix page, SPM, you can view flys as along with spreads now and can also see current history and comparison to prior years, all in the same place
As Bitcoin prices fell below $75,000, I wanted to do a quick analysis on what happens to all the BTC mining in ERCOT if prices fall further
Here is some AI generated analysis on the subject
Break-Even BTC Price by Machine & Power Cost
At current BTC prices, they can be full curtailed above 10 cents
Key Trades & Flow
At $65,000 BTC, full curtailment could occur at 8 cents
Here is the matrix with power prices and BTC prices
Let me know if you want to play around with this tool
In other news, Bill is not happy with the patterns in ERCOT ICE. He is going to have his agents analyze this further. May be the guy buying higher between 11-11.30 should wait for the settlement window?
Also, Jesus will return before 2027 is running at 4% chance
Last year it was 5%, so it is down from before. Somewhere there was a joke about funds not being able to beat the guaranteed 5%
