praveen
16-05-2008, 07:02 AM
Oil futures ended a whipsaw session slightly lower Thursday as the expiration of options played havoc with prices, driving crude near record high levels at times and down by more than $3 a barrel at others. Retail gas prices, meanwhile, advanced past $3.77 a gallon.
Options let investors bet oil prices will rise or fall in the future. Oil prices can fluctuate widely on days when options expire, analysts said. The effect may be exacerbated at the moment, when prices at historic levels have drawn more investors to speculate in options, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
"It's options expiration madness is what it is," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Contributing to the volatility, the June crude oil contract expires next week. Oil prices sometimes trade erratically as investors square positions ahead of a contract expiration.
Options let investors bet oil prices will rise or fall in the future. Oil prices can fluctuate widely on days when options expire, analysts said. The effect may be exacerbated at the moment, when prices at historic levels have drawn more investors to speculate in options, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
"It's options expiration madness is what it is," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Contributing to the volatility, the June crude oil contract expires next week. Oil prices sometimes trade erratically as investors square positions ahead of a contract expiration.