(Bloomberg) -- A second bumper oil options expiry in less than a month could inject volatility into crude prices Wednesday.
There are about 21 million barrels worth of December $80 calls for US benchmark West Texas Intermediate that are due to expire later today. US crude futures are trading close to $78 a barrel, but a day of solid gains could move prices closer to a level at which some contracts that are currently worthless would expire with value.
There's a similar volume of $80 puts, which would profit if prices close below that level. A price rally would also mean these contracts, that for now are set to pay out, would expire worthless — potentially spurring additional volatility in prices as traders hedge that exposure.
In oil markets, December options contracts tend to have the biggest open interest at expiry, as the final futures month of the year usually attracts greater interest from a broader pool of investors.
Late last month, a drop in Brent crude prices led to about 35 million barrels worth of options expiring with no value. The market has since turned on its head, with demand for bullish call options easing and bearish puts climbing instead.
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