[Sherman Logan]

The secret to instant wealth is to spot a mass delusion and bet against it. The Tulip Craze. Florida swamp land.

True, but timing is critical. Bet against it too soon and you lose. Timing the collapse of a bubble is not easy.

[SAJ]

Sometimes it is. Right now, f'rinstance, Brent Crude is trading $10 over WTI. Basis the June futures, it's $5.41 over. Reason: Hetco has taken 1/3 of the physical cargoes of North Sea (Brent, Forties, Odelisk) crude for February delivery.

This almost unprecedented differential between WTI and Brent cannot be maintained for any significant period of time. Therefore, buying June (or later) WTI and selling same-month Brent against it is a winner BUT, one doesn't know how wide the spread CAN get, might have 8-10 dollars risk in the trade. So, to limit the risk, one does the trade with options, buying June WTI calls and buying June Brent puts. Voila, $ in pocket by end of May, unless WTI and Brent both stay within roughly a 3 dollar range (they won't, btw).

Sometimes one can time the collapse of a bubble.