Article
Oil traders bet on $150 per barrel by late April
Brent crude oil futures are traded on the Intercontinental Exchange (ICE), a platform founded in London in 2000 to facilitate electronic trading in energy markets.
A futures contract is an agreement to exchange a "paper" asset for a physical commodity, settled in cash. The minimum oil contract size is 1,000 barrels, with trading conducted in U.S. dollars in multiples of this minimum.
Options, meanwhile, are contracts granting the right to buy (call option) the underlying asset—in this case, an exchange-traded crude oil futures contract (also in 1,000-barrel increments)—at a predetermined price (strike price), or to sell (put option) before a specified expiration date.
As a result, the landscape of oil and gas trading on ICE is highly complex. May futures, for instance, trade at one price.
Yet the market also reveals pragmatists—traders placing call options with a late-April strike price of $150 per barrel.
