Highlights:

  • Oil prices have reached their highest level since 2014 on growing demand, outpacing supply.
  • The 22nd OPEC & non-OPEC Ministerial Meeting will take place on 4 November 2021 (Thursday). The main objective of the meeting is to set the oil production for the coming months.
  • Informal discussions will take place from the week prior to this meeting. We have activated the CME Group OPEC Watch Tool for this meeting.
  • Friday 5 November 2021 – the day following this OPEC meeting – US non-farm payrolls data for the month of October will be published.

Managing current volatility in oil prices with WTI Options

WTI Options offer different expiration dates ahead of these important events:

  • Traders can use WTI American options (LO) and WTI weekly options (LO1-5).
  • Different expiration dates around the OPEC meeting and non-farm payrolls:
  • Ex: LO5V1 expires the Friday prior to the OPEC Meeting; LO1X1 expires on the Friday following the OPEC Meeting

How WTI weekly options are designed?

  • Expire every Friday that is not already a monthly option expiration.
  • Exercise into the active futures expiry.
  • Same tick size as the monthly options.
  • More granularity with 20 strikes at $0.25 per barrel strike increment above and below the at-the[1]money strike.
  • New weekly option listed the business day following an expiration.
  • Automatic exercise with no contrary instructions.

What are the key features of WTI weekly options?

  • Flexibility to manage short-term volatility and risk.
  • Precision timing to target specific events, like OPEC meetings.
  • More expirations (weeklies and monthly), more strike granularity.
  • Shorter expirations = lower premium.

Trading statistics & market access:

  • WTI Weekly Options are actively trading on CMED.
  • ADV in the past three month was close to 5,000 lot/day.
  • RFQ and DRFQ functionality for execution.
  • Liquidity providers available during APAC hours.
  • Contacts available on CMED RFQ directory.
Original report published on CME Group.

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