CZ19, Prices, Targets, Ranges, & Trends

CZ19, prices, targets, ranges, trends, performance, and risk management. Shortly after I posted the performance stats for CN22 price targets, trend tracking, I received the following note.

I am curious how the selective hedging worked in a year like zcz19, where it pretty much traded the same range for 3 years.

Unfortunately, I hurried the reply on the cell phone with a quick summary of CN22 instead of CZ19.  Big difference in price volatility and completeness of records.  In full disclosure, I do not have the same documentation for CZ19 that I do have for CN22, so some of the more detailed answer will have to rely on the same decision rules, but reading the results from the charts.

It is hard to believe, but the range of closes from high to low over the last three years of the contract for CZ19 was only $1.14, with a high of 468.50 and low of 354.25.  For two of the four years, the contract traded in a 40 cent range.  That limited volatility limits the need for price risk management, but it also limits the potential need and gain from forward pricing regardless of the trigger that is used to guide sales.

On the other hand, getting to the top 40% of the range only required average sales of about $4.23, and that level avoided being more that 50-70 cents off the bottom.  It can be described as marketing made simple.  A lot of folks were using $4.00 as CoP or BE to start sales and scale up a bit. The system made it hard to not get close to the top 40%, and may it explain why some advisors have been bad mouthed for performance anyone could achieve.  For 30 of the 36 months, it was hard to do anything wrong until the contract for both the high and low for the three years came in the last six months of the contract.

I think the original questions was meant to address the selective hedging performance for CZ2017, CZ2018, and CZ2019 individually rather than looking for forward contracting opportunities three years out for CZ2019. I need to point out that the only records I have at hand are the results using moving averages as the selective hedging triggers for the sales/hedges and offsets/lifted hedges.  Any other indicator could be used as the trigger, so selective hedging and moving averages are only linked here because that is the primary indicator that I use for strictly objective decision making that can be reproduced.

For 2017, the price range was $0.79 from high to low close in last 300 days of the contract.  The SH gain recorded was $0.5450 with one sale and no losses (1,0,0), or top 31.0% or the range.  For 2018, the range was $0.8325, and the gain was $0.19 with a 4,3,1 record , or bottom 22.8% of the range.  For 2019, the range was $1.1425, and the gain was $.8025 with 3,3,0 record. or top 29.2% of the range.

Posted by Keith D, Rogers, 12 May 2022