jesterboomer

Mark-to-Market vs. Mark-to-History

I agree, Mark-to-Market clearly ought to be Mark to a fairly long moving average. Earlier this year, mark-to-market rendered the income statements of gas producers such as CHK and DVN meaningless as natural gas prices spiked way above option collars and they were forced to recognize future losses on options. Now that gas prices have come down they will reverse all those imaginary losses.

It's ironic that the option collars that were put in place to ensure stability for the businesses produced unrealistic gyrations in their financial statements thanks to insane mark-to-market conditions. This hardly seems helpful.