Oil Options Traders Eye Price Spike as Political Risks Swirl - Bloomberg:
Whether it’s the U.S. sending military warnings to Iran or tensions in Venezuela, some oil traders have started to gear up for a possible price surge as political risks escalate.
Trading in relatively cheap option contracts that would profit from crude soaring to as much as $110 a barrel has taken off in the past two weeks. In total, the equivalent of more than 45 million barrels of $90, $100 and $110 calls, have traded in the last 9 sessions.
Those trades come against the backdrop of disruptions to supply in major oil producing nations. U.S. sanctions have forced output in both Iran and Venezuela sharply lower, while America has also dispatched an aircraft carrier to the Middle East in a warning to its Persian Gulf nemesis. With turmoil in other OPEC nations, some are looking at political risks as a source of potential value.
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