Vols in the front months for products are down significantly. RB Dec down 15 vols to 69, HO dec vol down 8 vols to 57. Crude remains fairly well bid only down 1-2 vols in the front and about .5 in the back.
Volatility is so high that these moves are not that surprising. Directional plays are best served with spreads if the strategy is to hold through expiry. Those trading opportunistically with options have to be careful of swings.
Again, the crude market was largely affected by equity markets. We know demand is softer, and supply reductions are not yet significant enough to send us higher. However, back month crude has strengthened, indicating plenty of buyers for longer dated energy futures.
New York, 345pm.
Friday, November 14, 2008
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