Message-ID: <10873538.1075857731769.JavaMail.evans@thyme> Date: Wed, 15 Nov 2000 03:36:00 -0800 (PST) From: frank.hayden@enron.com To: john.lavorato@enron.com Subject: Trade idea Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Frank Hayden X-To: John J Lavorato X-cc: X-bcc: X-Folder: \John_Lavorato_Dec2000\Notes Folders\Notes inbox X-Origin: Lavorato-J X-FileName: jlavora.nsf Thinking about bull move, the only trade I really like is being long physical and short NYMEX. If you believe that NYMEX is doing a "buzz lightyear" (infinity and beyond), the next question is where does that put the cash. Back in '95, Chicago cash went to $40 and merc died out sub 5 dollars. Also, '95 had a huge geographic basis rift, the structural shift had Z3 trading about $1.50 over Waha. On the upside, cash will suffer constraints, causing demand spikes. On the downside, cash shouldn't materially outpace NYMEX. Reviewing geographic arbs and considering the east coast political environment (high potential for congressional intervention) as well as ok-ish storage, the East may be the best basis sell vs. a long west trade (Waha I'm uncertain about, particularly if the cold doesn't hit Texas...Chicago might be better given what's going on there except for the Alliance issue...Socal appears to be the best geographic long...PGE citygate could really rock given storage and increase supply competition given Alliance PL... The Z6/Chicago spread is trading around $1.56 for the winter (FH) and approx. a dime in today's intra-month. The Z6 vs. NGI-PGE/CG spread has the Jan-Mar around .94 cents, Z6 over. Intra-month it is trading at $2.43, PGE/CG over Z6 (I'm waiting on additional stats, but I think I like this trade...) Additionally, playing the '95 scenario, we should be long every basis downstream of Henry and short something else, maybe NYMEX, Waha, Katy (notice smaller font) I'm still reviewing economic stats regarding the drivers to these trades such as, Sable Island, LNG, Chippewa (Canadian imports) and Chicago/California storage . As well as evaluating which geography would be the best buy.... Preliminary trades (let me know which ones strike your interest and I'll focus my analysis..) Long NGI-PGE/CG, Short Z6 Long CNG North Valley, Short Z6 Long NGPL Lousiana pool, short MOPS, TETCO STX Long CGT, short NYMEX (not very exciting, small basis) Long Z6, short Chippewa Long physical, short NYMEX Still looking, still thinking, but gun-to-my-head.... Frank