Anticipated oil-price plunge drives option prices to record high

09/22/2009 | Bloomberg

Oil traders buying options to protect themselves against a collapse in the price of oil are paying record prices, as the Organization of Petroleum Exporting Countries delivers 600,000 barrels a day in excess of global demand. The spread between what traders pay to bet on a price drop and a price increase expanded to 10 percentage points, according to Banc of America Securities-Merrill Lynch. "If ever there was going to be a retreat below $60 a barrel, it is now," said Stephen Schork, president of Schork Group.

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