Crude Puts Rise as IEA Report, Government Shutdown Depress WTI

Crude oil puts rose when futures weakened as the U.S. government shutdown continued and the International Energy Agency projected higher North American oil output while trimming its forecast for 2014 global demand.

Implied volatility of puts protecting against a 10 percent drop in December futures prices on the New York Mercantile Exchange, a measure of expected futures swings and a key gauge of value, rose to 26.19 percent at 3 p.m. from 26.11 percent yesterday. At-the-money volatility for December options dropped to 19.98 percent from 21.19.

“There’s a lot of put buying,” said Dan Flynn, an energy market analyst at Price Futures Group in Chicago. “Supplies abound and demand is dwindling.”

West Texas Intermediate crude for December delivery fell 83 cents to settle at $102.06 a barrel on the Nymex. The front-month November contract, which expires Oct. 22, declined 99 cents to $102.02.

Puts accounted for 54 percent of electronic trading volume today. November $100 puts, the most active contract, rose 9 cents to 44 cents a barrel with 2,705 lots trading as of 3:02 p.m. December $95 puts advanced 7 cents to 66 cents a barrel on volume of 2,397 contracts.

In the previous session, puts accounted for 64 percent of the 123,438 lots traded.

January $75 puts were the most-active options yesterday with 16,949 contracts changing hands as they lost 1 cent to 9 cents a barrel. November $95 puts, the next-most active, fell 7 cents to 5 cents on volume of 6,360 lots.

Open interest was highest for December $90 puts, with 42,224 contracts. Next were December $80 puts with 41,651 lots and December $100 calls with 32,443.

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

To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net

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

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