Oil $200 Options Rise 10-Fold in Bet on Higher Crude

[endarkenment]

Source: bloomberg

Jan. 7 (Bloomberg) -- The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.

Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.

While analysts at Merrill Lynch & Co. and UBS AG say the slowing U.S. economy will lead to the biggest drop in prices since 2001, the options show some traders expect oil to rise for a seventh straight year. Demand will increase 2.5 percent in 2008, according to the International Energy Agency. U.S. inventories fell to a three-year low on Dec. 28. Production from Mexico is declining and Saudi Arabia is behind schedule in opening its newest field.



Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=ac7ZyK0ovWrM&refer=us

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Don't worry, be happy.

[Earth_First]

1. Just curious...

What is the typical volume of contracts on futures for crude say month-to-month?

Just trying to see where 5,533 stands opposed to typical trading...

[endarkenment]

3. I have no idea

I just found it fascinating that the old 'invisible hand' is starting to bet on $200 oil.

[Captain Angry]

11. None.

Typically, I don't think those contracts exist. But some savvy investors are betting that people will part with their money.

They're running for 2 to 30 cents a barrel. In other words, as the buyer, you decide to throw away $300.00. BUT, if *something* happens, and oil spikes to $200 a barrel, you get to sell $20,000 worth of stuff, and it only cost you those $300.00.

Therefore, it's a huge longshot, the writer gets your $300.00 bet. If oil hits $200 a barrel, they crap themselves, and dish out $20,000. If it hits $199, they giggle and keep your $300.00.

[NightWatcher]

2. gee, it's not like there is stress in the Straits of Hormuz...

[endarkenment]

4. effect cannot precede cause. not in this universe.

it is that one way time dimension puzzle.

"Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period."

[ohio2007]

12. Actually, certain people in the region would do well if sabre rattling doubled the price

Ahmadinejad wants to redistribute wealth

http://www.aljazeera.com/news/newsfull.php?newid=76432

Viva Ahm-on-a-jihad ;)

[pleah]

5. Bend over and pass out the vaseline. This year can't go by fast enough for me.

[orion9941]

6. We'll be lucky if they even spit in their hand.

[lovuian]

7. if the Strait of Hormuz closes its we are screwed times

yes 200 a barrell

[clarence swinney]

9. Cruise Control 60 MPH

On Interstate and no need to Import that 16% from Saudi Arabia.

Our OIL Comes From--
Our wells
Canada-
Mexico-
Venezuela
84%

[Javaman]

16. If the straight closes, $200 will look cheap. nt

[clarence swinney]

8. RICH MAN'S LAS VEGAS CASINO

Wall Street is a false empire of wealth

I bet you one million it will rise. I will take it. My insider says it will drop.

[benld74]

10. Thats just nuckin futz

[dysfunctional press]

13. $200/bbl oil would be a good thing for alternative energy.

it would make a whole range of energy sources comparatively "affordable"

although peak oil will make the price $200 sooner than many expect, i don't expect that it will hit that price by the end of the year...unless there's like- a war -or something.

[Jersey Ginny]

14. Agreed. The cost of oil makes alternative energy more viable

It also reflects some of the actual cost of oil in terms of pollution/CO2 so higher prices makes the energy playing field more fair and gives alternatives a better chance.

[Nihil]

15. Unfortunately, it would also be "good" for proponents of really BAD energy ...

... oil-shales being the one at the top of my mind at the moment.

When the price goes up like this, it reinforces the case for the
greedy destructive shit-for-brains who support destroying the land,
polluting the water and wasting the energy in order to obtain a
small amount of fuel for their SUVs from grossly inefficient sources
like oil-shales. (Hello Canada? Say goodbye to your natural gas and
freshwater supplies!)

:grr:

[Javaman]

17. Everyone is on this thread so far fails to realize that if oil goes up...

so does food.

so unless you have a garden, belong to a CSA, have stock piled military rations or have some sort of magic pill to fill your stomach everyday, I would be really worried.

Oil rising this fast is the beginning of the end.

Prepare to live lean...really really lean.