Oil Options Rise as Futures Sink on Isaac Plant Closures

Volatility on near-term crude options fell as futures rose after Hurricane Isaac reduced offshore oil production in the U.S. Gulf Coast.

Implied volatility for options expiring in October, a measure of expected price swings in futures and a gauge of options prices, was 28.64 percent at 4:06 p.m. in New York, down from 28.79 percent yesterday. Bets that prices would fall accounted for 56 percent of electronic trading today.

Crude oil for October delivery rose 86 cents to settle at $96.33 a barrel on the Nymex, the first gain in four days.

The Bureau of Safety and Environmental Enforcement reported that 93 percent of crude production from the Gulf has been shut in as Isaac was expected to strike the Louisiana coast near New Orleans today.

The most active options in electronic trading today were October $90 puts, which slipped 19 cents to 59 cents a barrel at 4:46 p.m. with 1,888 lots trading. October $86 puts were the second-most active options, with 1,356 lots changing hands as they fell 8 cents to 20 cents a barrel. One contract covers 1,000 barrels of crude.

The exchange distributes real-time data for electronic trading and releases information the next business day on floor trading, where the bulk of options trading occurs.

In the previous session, bearish bets accounted for 54 percent of contracts traded.

October $90 puts were the most actively traded options yesterday with 4,234 lots changing hands. They rose 7 cents to 78 cents a barrel. October $95 puts advanced 21 cents to $2.40 on volume of 2,856.

Open interest was highest for December $100 calls with 45,986 contracts. Next were December $80 puts with 43,703 lots and December $120 calls with 41,353.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.