John Arnold

That's basis trading.

I did that for a small part of my career, those price differentials between OnePoint and The Hub in Louisiana.

But most of my career in trading was trading what we call the fixed price of natural gas.

And so this is, if you're watching CNBC and on the ticker, it has a gas price.

So it changed over time.

I was for a long time the largest market maker in the business, which I did both because I was profitable

as well as maybe more importantly, it allowed ability to put on and off positions with lower slippage and with fewer people knowing what my position was.

And then also gave me insight into who was doing what in the market.

And so I could start to build the psychology of the market.

I could see certain traders positioning certain ways and try to reverse engineer what their thinking was, which helped me in trying to figure out how I wanted to be positioned.

So a healthy financial market exists for a reason.

And that reason is that there are commercial players, in this case, producers or end users who have exposure to the commodity market.

that are willing to pay something to have somebody else reduce their risk to the commodity price.

And they will pay something to the market for that risk management.

And if that exists, so if you think about

A producer of natural gas whose revenue is almost entirely based upon what the price of natural gas is for a given month or even day by day.

There is this huge boom bus that can happen because commodities are naturally have this boom bus cycle.

And so businesses, then if you're exposed just to the spot price or today's price.

Those businesses also go through a boom-bust cycle.

And so many businesses will choose to hedge out or fix some of their forward revenue and reduce their exposure to short-term swings in the market.