Financial turmoil forces liquidation

Overnight news confirmed the intention to sell ML to Bank Of America while Lehman Brothers filed for Chapter 11 to protect its' solid business units. AIG also suffered pressure to sell without any back up financing in place. The US fed is standing firm regarding no bail-out or back stop facilities.

While financial markets are under pressure, there may be some forced liquidations in the markets from ML customer or even index funds. Refined products are down more than 20 cents this morning, providing excellent opportunity for heating oil buyers to lock in a Q1 300-350 call spread for 13 cents/gallon. Crude oil volatility has popped as high as 55% for Wed expiry. There is plenty of room for the market to move $5 by Wednesday.

NY, 0900