An Options Trade to Take Advantage of Oil Volatility
- By Viresh Kanabar and Andrew Simon
- 4 min read
Summary
- Crude and refined product inventories have increased significantly since January.
- Our inventories-based model prices oil at c. $76 per barrel, which is higher than the current Brent price.
- Speculative positioning looks to be washed out following the recent price crash.
- However, we see limited scope for a far lower oil price, making options a superior way to play a rebound in Brent.
Summary
- Crude and refined product inventories have increased significantly since January.
- Our inventories-based model prices oil at c. $76 per barrel, which is higher than the current Brent price.
- Speculative positioning looks to be washed out following the recent price crash.
- However, we see limited scope for a far lower oil price, making options a superior way to play a rebound in Brent.
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