Bloomberg News

Brent Oil Call Option Volumes Surge as Iran Risk Intensifies

February 17, 2012

Feb. 16 (Bloomberg) -- Trading volumes in Brent crude-oil call options surged as tensions worsened between Iran and Western governments.

Daily volumes in options granting the right to buy Brent for more than the current market price have risen above 25,000 on four days during the past two weeks, signaling an increase in bets on a possible price rally.

Total volume was 39,164 lots as of 4:20 p.m. in New York, according to data compiled by Bloomberg. Call volume was 31,742 contracts, which would break the record of 29,383 set on Feb. 9 according to the ICE Futures Europe exchange.

Brent crude futures settled at an eight-month high of $120.11 a barrel in London today, having gained 12 percent this year on concern that the dispute with Iran over its nuclear program may lead to a disruption in oil exports from the Persian Gulf region.

Call options outnumbered puts, which are used to protect against slumps in the oil price, by more than four to one as of 3:50 p.m. today in New York.

The daily volume of Brent calls yesterday totaled 28,010, or about six times the level for puts.

Iran said yesterday it was cutting shipments to France and the Netherlands, and that it had loaded locally built fuel plates into its nuclear research reactor in Tehran, according to reports by the state-run Mehr news agency and Press TV, respectively. The state-run Fars news agency reported separately that Iran warned France and the Netherlands and four other European Union nations without cutting exports to any of them.

--With assistance from Margot Habiby in Dallas. Editors: David Marino, Richard Stubbe

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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