Oil Traders Turn to Obscure Options Market for Extra Finance
- Option deals help traders to manage soaring transaction costs
- Prices have swung wildly after Russia’s invasion of Ukraine
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Some oil traders are tapping the options market to ease the financial pressure caused by soaring margins and volatile crude prices.
Since war broke out in Ukraine in February there has been a surge in trading of so-called euro-box spreads on West Texas Intermediate. The strategy is similar to a zero coupon bond -- a way for sellers to raise cash in the face of limited sources of capital.