Monday, January 07, 2008

I couldn't help myself: Bloomburg reports....

...that the investors buying options contracts on the Exchange are making a very scary bet - scary for us, that is. They are buying these option contracts now because they believe in a year's time, the price they specified on the contract will be BELOW the market rate, and therefore they will make money by selling their cheap buy. That's how the options contracts work - buy below the going rate and then turn around and sell quickly to make a profit. So what is the commodity? - and what is the price at which they are legally contracted to buy it by the end of the year?

Oil $200 Options Rise 10-Fold in Bet on Higher Crude (Update5)
By Grant Smith

Jan. 7 (Bloomberg) -- The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.

Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.


Hope you're ready for $5-$6 a gallon gasoline - and the heart-stopping price increases of everything else that is made or transported by petrochemical products - because here it comes.

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