Option volume was light yesterday with about 106,000 contracts trading (Jan and Feb averaged 217,926)… Implied volatility did not jump much, with May settling around 42%… Only one option traded over 10,000 times… June 25 puts, settling at $.08, traded 11,700 times…
However, WTI spread options were active with around 50,000 trading, all but about 5,000 were puts… 4Q16 -75/-100 put spreads traded 3,000 times, settling at 3 cents… And some put butterflies traded in the same quarter: -75/-100/-125, 2,000/4,000/2,000 times… These trades might indicate that traders are looking for weakness in 4Q16 structure going forward… Recall an earlier post where a spread option trade was initiated to profit in a backwardated market in 2017…
Yesterday’s EIA report was not all bearish:
Domestic production was estimated down 30,000 for the week, to 9,038…
Cushing stocks declined by 1.3, to 66.2 million…
Gasoline demand is scorching hot at 7% over last year (4 week average)… (nicer weather, lower heating costs, more people working, etc…)
Here are gasoline stocks from the EIA:
But, here are crude stocks:
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