Oil: Traders to collect big on slick bet

From the Financial Times:

Investors who placed summer bets that oil prices would fall below $100 a barrel are set to make huge profits on Monday, with some speculators reaping a return of more than 2,000 per cent in less than six months.

The expiry of the December put options – derivatives that give holders the right to sell at a predetermined price and date – means some investors will be selling oil at prices as high as $100-$120 a barrel, well above Friday’s close of $57.04 a barrel.

Traders warned the expiry was likely to trigger volatility in the oil market.

Olivier Jakob, of Swiss-based oil consultants Petromatrix, said the number of options to be delivered was set to be a record.

He said a net 500,000 contracts were likely to be delivered at the end of the trading in New York on Monday, almost 80 per cent above the previous record set this summer and more than 10 times the average since January 2007....MORE