Crude Puts Jump as Oil Sinks on Fading Syria Strike ConcernBarbara Powell
Crude oil puts increased and calls dropped as underlying futures slid on fading chances the U.S. will launch a military strike against Syria over its alleged use of chemical weapons.
Implied volatility of puts protecting against a 10 percent drop in November futures prices on the New York Mercantile Exchange rose to 28.62 percent at 3:55 p.m. from 28.29 percent yesterday. Volatility for calls covering a 10 percent rise slipped to 25.68 percent from 27.42.
“Now there looks like there is an exit on Syria and the odds of immediate attack have gone down dramatically and you’re buying puts,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
West Texas Intermediate crude for November delivery fell $1.98, or 1.8 percent, to settle at $106.49 a barrel on the Nymex. The front-month October contract sank $2.13 to $107.39.
Futures slid as France said it will submit a Russian-backed plan to confiscate Syria’s chemical weapons to the United Nations, and as Interfax reported that Bashar al-Assad’s government accepted the proposal. President Barack Obama asked Democratic senators to delay a vote on authorizing military strikes in Syria to allow time for talks on eliminating that country’s chemical weapons, lawmakers said today.
The most active options in electronic trading today were November $135 calls, which fell 8 cents to 8 cents a barrel with 3,170 lots trading as of 4:02 p.m. October $102 puts were the second-most active, rising 10 cents to 22 cents a barrel on volume of 2,737 contracts.
At-the-money volatility for November options, a measure of expected futures swings and a key gauge of value, fell to 24.82 percent from 25.28 percent yesterday.
Calls accounted for 53 percent of electronic trading volume today. In the previous session, calls made up 54 percent of the 102,143 lots traded.
November $140 calls were the most-active options yesterday with 8,529 contracts changing hands as they lost 4 cents to 12 cents a barrel. October $118 calls, the next-most active, fell 19 cents to 10 cents on volume of 4,507 lots.
Open interest was highest for December $80 puts, with 41,274 contracts. Next were December $90 puts with 38,215 lots and December $105 calls with 34,889.
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.