A positive outlook on the US economic front from Fed Chairman Ben Bernanke gave impetus to a late-day equity surge. The crude complex followed higher, with the front month contract rallying close to $2.00 and significantly narrowing the 2009 contango curve. All eyes remain on Opec and whether or not the producer’s cartel will announce further production cuts of +1M barrels/day at the group’s next meeting on March 15.
The Singapore Jetkero complex has mirrored other regional product markets with a drift lower during the recent consolidation phase. This type of movement allows Airlines and other consumer hedgers to lock in significantly lower caps on their future fuel purchases without having to pay upfront option premiums. The Sing Jetkero April09-Dec09 $70 call can be owned for zero premium by selling the $47 put in the same tenor. Similarly, the April09-Dec09 $70/95 call spread can be owned for zero premium by selling the $43 put. This 3-way structure allows for $4 of extra breathing room on the downside while limiting the upside protection to $25. Note that moving the call spread structure higher up the curve would also lower the put strike that would need to be sold to make the structure costless.
Singapore, 09:00
Tuesday, February 24, 2009
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