How come there is no OPTIONS for crude oil?

Discussion in 'Commodity Futures' started by misterno, Dec 28, 2008.

  1. Calendar spreads, calendar butterflies and rolls in CL options carry futures-calendar risks. This does not in any way refute Black Scholes. It's simply another risk to price. If you're long the Feb-Mar 50 call calendar you would hedge a portion of your futures risk in shorting the Feb-Mar futures spread.
     
    #11     Dec 28, 2008
  2. Thanks for the link MGJ

    Here is what I don't understand. Looking at your link at 2016 december call options, I saw that options with strike price $110 is settled at $9.75 whereas option with strike price $200 is settled at $3.51

    This means that whoever purchased $110 strike price call option with $9.75 will be in the money if the spot price closes at $119.75 on the third friday of December. But same call option with $200 strike price is selling for $3.51 meaning, the call option buyer will be in the money if the spot price exceeds $203.51 on the third friday of that month.

    What am I missing here? Who would wanna buy an option that would be in the money at $203.51 whereas you can get one at $119.75 in the money.

    I understand you have to put up 3x more money at the beginning but there is almost 2x more risk to take.

    Can someone explain?
     
    #12     Dec 28, 2008