[lawnchair]

$this->bbcode_second_pass_quote('', 'I')nvestors who placed summer bets that oil prices would fall below $100 a barrel are set to make huge profits on Monday, with some speculators reaping a return of more than 2,000 per cent in less than six months.

The expiry of the December put options – derivatives that give holders the right to sell at a predetermined price and date – means some investors will be selling oil at prices as high as $100-$120 a barrel, well above Friday’s close of $57.04 a barrel.
Traders warned the expiry was likely to trigger volatility in the oil market.

Olivier Jakob, of Swiss-based oil consultants Petromatrix, said the number of options to be delivered was set to be a record.

He said a net 500,000 contracts were likely to be delivered at the end of the trading in New York on Monday, almost 80 per cent above the previous record set this summer and more than 10 times the average since January 2007

[sicophiliac]

I need to learn options, good way to make a killing once an inflationary economic rebound sends oil back up in the next few years.

[bratticus]

$this->bbcode_second_pass_quote('', '[')u]Output cut fears, tanker hijack push oil to $58 a barrel

...

Olivier Jakob at Petromatrix said that the expiry of December options should see some traders attempting to protect certain price levels, with much of the focus around $55-$60 a barrel level. However, analysts said that longer-term concerns over the worst financial crisis since the 1930s was likely to keep oil prices under pressure.

The global slowdown has crushed demand growth estimates for oil next year. The organisation slashed its forecast for demand for its oil in 2009 by 220,000 bpd to 30.9 million bpd on Monday. However, the group’s president Chakib Khelil said he saw a meeting of Opec ministers in Cairo on November 29 as a brainstorming session, rather than a production meeting. Several Opec members want further production cuts to try and boost prices, with Iran looking for a 1-1.5 million bpd restriction on member output.

[joewp]

$this->bbcode_second_pass_quote('sicophiliac', 'I') need to learn options, good way to make a killing once an inflationary economic rebound sends oil back up in the next few years.

[bratticus]

Well here it is, Record Put Option Monday. Stock market is up, oil is up, but this is all short-term stuff embedded in a long-term down turn, right?
$this->bbcode_second_pass_quote('', '[')u]Monday Morning Outlook: Beware the False Hope of Bull Spikes in Bear Markets

Post-expiration week headwinds point to a rough week for the stock market

by Todd Salamone 11/24/2008 7:00 AM
Schaeffer's Research

...

As I stated a few weeks ago, short-term rallies of impressive magnitude tend to occur within bear markets, bringing hope to the bulls and testing the will of the bears. In this, one of the most volatile markets ever, we continue to recommend that traders position themselves for an "anything can happen" outcome. For example, Friday's rally could reverse as early as this week, with the 5-day period following options expiration bringing the usual build-up of put options among those seeking portfolio insurance. This activity typically provides a headwind for equities.

On the other hand, following Saturday evening's announcement that Lawrence Summers will head the National Economic Council, a rally to 850 by the SPX isn't out of the question. Another possible scenario is a period of sustained strength that pushes the SPX up to the 1,130 area in the weeks and months ahead. Such a development would imply a retest of the 160-month moving average, a trendline that acted as support at the lows in 2002-2003. It would also bring the SPX close to a 50% retracement of the index's October 2007 high and last week's low.

...