Crude Oil At $1.50 Per Barrel?

S

syd697

Hello ET'ers:

Been awhile since I've posted/lurked.

Hope everyone is doing well and staying healthy.

Crazy times in these markets.

Being a former NYMEX guy, I see the May crude oil $1.50 strike put options are bid 2 ticks. That's $20 per contract. Expires in 48 days.

Willing to shell out $1,500 per barrel for potential assignment? Hmmm.

That's a scenario I thought I'd never see.

Thoughts?
 
You're talking about the June contract - expires May 14. Bid now 1 tick with a trade at .02. Volume =1.

Not sure what the margin would be, but the net return is undoubtedly low. The trade is no longer there, anyways.

Personally, I'd rather trade CL than tie up that much capital for less than $18 net.

Still, it's a good trade.
 
It may be due to high volatility and math. I have a few 10.5-strike puts expiring in 20 days, only because I needed them to close some butterflies, ratio spreads, and other complex combos, and have less exposure to the downside. And I'm at 75% profit.

The $1.50 you mentioned, I'm just testing an idea where I'd need them, and indeed I need to buy them right now for $0.01 as part of BWB, but they won't let me have these for $0.01. Just placed this live/actual order as a test:

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You're right donnap, it was the June expiration.

This is one of those "holy crap" trades, where you can't even believe that the strike exists.

If crude fell to $1.50/bbl, the world would end anyway, so...:p
 
No doubt due to high vol. The wings get out of whack.

It really depends on the margin req. for the NP. What's the return over about 48 days?

Seems like a sure bet, though.

guru, I don't see the point in the BWB over the ratio spread, unless you're trying to cap margin or profit, somehow.

Thanks for the pointing out the trade, OP.

Extraordinary times, indeed.
 
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donnap said:
No doubt due to high vol. The wings get out of whack.

It really depends on the margin req. for the NP. What's the return over about 48 days?

Seems like a sure bet, though.

guru, I don't see the point in the BWB over the ratio spread, unless you're trying to cap margin or profit, somehow.

Thanks for the pointing out the trade, OP.

Extraordinary times, indeed.
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Yes, it was for demo purposes to show how worthless options may still make sense at $0.02, and how someone may want to cap the margin. Would make more sense for different/higher strikes but the same math/logic applies to any strikes and shows that you can't just get worthless options for free, or even for $0.01 in this case.
 
All I can say is WOW!!!

Front month crude futures (May) ticking down to $1.03/bbl on the most recent print. Insane!

Next month June futures hitting $21.75/bbl.

Even being a former NYMEX guy, I'm pretty speechless. Just watching for now.
 
-40. Prepare your bathtubs. Can you imagine those naturally short the switch? The bankruptcies are a massive overhang going fwd.
 
I have a large backyard and a shovel. How do I order 50 barrels? Do they include the barrels, shipping and handling, and still give me money?
 
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