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Chris57
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Domer wrote: Why did someone have 249 contracts for sale at 39 on Arctic Ice 2011 > 2007? Scratching my head on that one.


I think that Geoff Beacon is involved. The response I got from him was



You say

We already knew the decline in sea ice was faster than models predict, presumably this effect was already acting over the last few years and we had records in 2005 and 2007 but not in 2006, 2008, 2009 or 2010.


“We” may know but others may not acknowledge this. See my comments to “Loosing time not buying time. http://www.realclimate.org/index.php/archives/2010/12/losing-time-not-buying-time/ where I criticise the Trillion Tonne Scenario for being too optimistic. This says when we get to emissions of a trillion tonnes of carbon since 1750 and we will get a 2 deg C rise in temperature and that is just about bearable. But this scenario was created with models that may underestimate warming because they underestimate feedbacks, such as sea-ice albedo. (Also see “Fast and Super-fast – Disappearing Arctic sea ice”, http://www.brusselsblog.co.uk/?p=45)

Another feedback which may be underestimated is methane from Arctic tundra. The UK Government’s Climate Change Committee have said

On the subject of methane and climate feedback; we do not assign probabilities to methane release because we do not yet know enough about these processes to include them in our models projections.

See “The rise in methane and the Climate Change Committee”, http://www.ccq.org.uk/wordpress/?p=120.

To echo Tamino’s earlier comment – that doesn’t give me much comfort in terms of climate change . For risk analysis, I’d suggest using the much more pessimistic scenario. We need a plan B. See “Plan A might fail … so we need Plan B”, http://www.ccq.org.uk/wordpress/?p=139.

Thanks for the earlier help. I’ve placed a bet with Intrade (rather “offered to sell a contract”) on this year’s Arctic sea ice.


Seems rather odd really. First he suggests one thing then when I point out that that is unlikely to have effect, he seems to ramble on about other things:

eg 1. others "may not acknowledge" there wasn't an extent low in 6 8 9 or 10. Huh??

or 2. "For risk analysis, I’d suggest using the much more pessimistic scenario" What has using a pessimistic scenario for risk analysis got to do with the probability for this year? biasing probabilities doesn't seem like something relevant.

3. Not assigning probabilities to methane releases. Huh? We can look up methane levels.

4. Trillion Tonne Scenario. Huh? relevance?

If this was first posted here, I might wonder if he is deliberately being vague and/or trying to sound stupid to encourage people to bet against him. However with the post being on realclimate, I doubt that is the case. So I am at a bit of a loss to understand.

Disclaimer: I do not hold / have not held any contracts in this claim yet but might at some point, ie I am interested but don't know which way to bet so far.

This message was edited 1 time. Last update was at February 03, 2011 11:37:48 UTC

Panner
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Chris57 wrote:

Disclaimer: I do not hold / have not held any contracts in this claim yet but might at some point, ie I am interested but don't know which way to bet so far.


As an aside, even if you don't know which way to bet yet, you can still make market. I wouldn't recommend it with just any contract, but if you plan on doing a lot with this contract, then a little market making can build some volume and interest while you figure things out.

This message was edited 1 time. Last update was at February 06, 2011 13:37:24 UTC

Chris57
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Panner wrote:
As an aside, even if you don't know which way to bet yet, you can still make market. I wouldn't recommend it with just any contract, but if you plan on doing a lot with this contract, then a little market making can build some volume and interest while you figure things out.


I haven't got the spare funds to do it. Besides which, the volume of 1068 and range of 8.8 don't seem too bad.
Chris57
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Domer wrote: Why did someone have 249 contracts for sale at 39 on Arctic Ice 2011 > 2007? Scratching my head on that one.


I don't know if it is the same person again, but now there is 350 contracts for sale at 38 and 500 for sale at 39.

This message was edited 1 time. Last update was at February 08, 2011 23:13:37 UTC

Domer
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Very interesting. Definitely keeping my eye on this market.

Perhaps he is confused on the rules of the contract?

This message was edited 1 time. Last update was at February 09, 2011 05:15:07 UTC

Chris57
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Domer wrote:
Perhaps he is confused on the rules of the contract?


Why would you think he is confused on the rules of the market? (I don't see any inconsistancy between what was said on realclimate and the bet/offer placed as mentioned.)

I would expect widespread agreement that 2 of the last 6 years have had records so a) similar to previous years' probability of no record this year would give a price of around 66.6.

and b) Due to 'the state of the ice', this year's probability should be 'substantially' less than 66.6.

But how much is 'substantially'; (66.6 - 38 )=28.6 or more or less? This seems a difficult question to answer and I wouldn't expect widespread agreement.

Unless you believe the 'state of the ice' is the same as previous years, it seems to me like you need to be able to model the ice to get any reasonable idea of how to convert 'state of the ice' into probability change. Perhaps the betting should be left to ice modeling climatologists? Maybe it already is or maybe the level of activity is surprisingly high for that?

Certainly interesting to watch. But I am certainly not going out on a limb with large bets that would seem to me to be little more than wild speculation.
Domer
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Well I'll hold off my analysis for now, because there might still be value here that others aren't seeing and it might not be wise to share it

I'll probably re-look at this after the Oscars are over.
Chris57
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Gisstemp for Jan is now shown as 46. Seems early?

Anyway on to Feb 11 GTA contract:

Just 49 of last 730 months (6.7%) have shown a rise of 20 or more over previous month.

Just 15 of last 730 months (2%) have shown a rise of 20 over highest of the previous two months.

If you think the probability might be lower than these figures indicate then there is 16 contracts available at 7.

This message was edited 1 time. Last update was at February 10, 2011 17:19:52 UTC

JonT
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Does anyone have any idea what, if anything, just happened to cause the lowest sell bids on the annual sea ice minimum contract to be around 60 rather than around 40? If there's been any dramatic news in the last few days that would have changed the opinion of someone who previously believed a new record minimum was likely, I missed it. Maybe there just weren't very many such people and they've sold as much of the contract as they like or have redeployed their Intrade funds to other more attractive contracts.
Domer
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Maybe they realized how stupid the pricing was?
theplainestguy
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No real news came out. The large offers for the contract at 38 and 39 pulled. The bidders must have smelled blood and lifted the 44s and 45s and bid the contract in his face. So the situation now is as follows: if the seller has strong conviction that the contract settles 0, he/she should come out and hit all the bids back down. Otherwise, the bidders will push the price up to the point of pain and induce the seller to close his/her contract. This is just trading tactics.
JonT
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The pricing may have been stupid but there seemed to be very little appetite to take advantage of that. I might have bought more but there's a limit to how much money I want to risk on something I think could easily go either way, even if one outcome is more likely than the other. I guess anything is possible, even if I find it hard to believe anyone would offer that many contracts at that low a price without doing their homework first.
Chris57
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Large sells are now back but at 50 not 38/9.

That doesn't seem to be either of

he/she should come out and hit all the bids back down. Otherwise, the bidders will push the price up to the point of pain and induce the seller to close his/her contract. This is just trading tactics.


To me it now seems more like:

Just got a little nervous about large holdings and decided 38/39 was too aggressive. Probably still believes it will be false but just wants better return for risk of large holding.

This message was edited 1 time. Last update was at February 21, 2011 22:43:15 UTC

Chris57
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Chris57 wrote: Gisstemp for Jan is now shown as 46. Seems early?

Anyway on to Feb 11 GTA contract:

Just 49 of last 730 months (6.7%) have shown a rise of 20 or more over previous month.

Just 15 of last 730 months (2%) have shown a rise of 20 over highest of the previous two months.

If you think the probability might be lower than these figures indicate then there is 16 contracts available at 7.



Gisstemp for Feb is now shown as 44.

On to Mar 11 GTA contract:

Just 40 of last 732 months (5.5%) have shown a rise of 21 or more over previous month.
Just 18 of last 732 months (2.5%) have shown a rise of 19 or more over highest of the previous two months.

If you think the probability might be lower than these figures indicate then there is again some (only 2 at present) contracts available at 7.

Chris57
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Chris57 wrote: Gisstemp for Feb is now shown as 44.

On to Mar 11 GTA contract:

Just 40 of last 732 months (5.5%) have shown a rise of 21 or more over previous month.
Just 18 of last 732 months (2.5%) have shown a rise of 19 or more over highest of the previous two months.

If you think the probability might be lower than these figures indicate then there is again some (only 2 at present) contracts available at 7.


Gisstemp for Mar is now shown as 57.

On to Apr 11 GTA contract:

182 of last 734 months (24.8%) have shown a rise of 9 or more over previous month.
103 of last 734 months (14%) have shown a rise of 9 or more over highest of the previous two months.

Currently buy sell range is 12 to 20 which looks reasonably sensible for above figures, so you would need some reason to think that temperatures should be moving in a particular direction in order to want to trade. (e.g. weakening La Nina could cause temperatures to rise but I am not sure many people will be thinking that should have much effect yet.)


Meanwhile Arctic ice contract has moved quite significantly to a range of 64-68 compared to previous discussion of large sell orders at 38/39.

This message was edited 2 times. Last update was at April 23, 2011 10:30:32 UTC

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