World's first cleared dry bulk options traded at IMAREX
[First published: Wednesday 24 May 2006 4:33:44 pm]The first two cleared dry bulk options contracts ever, were traded at IMAREX today 24 May. The two contracts are derivative contracts linked to the future charter rate of panamax bulk carriers in the third quarter of 2006.
"Dry bulk freight options should be a natural part of the trading portfolio of both owners and charterers - now that you can trade them with clearing just opens a new world of possibilities," says Lauritz Haarr, Options desk manager at Imarex in Oslo.
The option contracts traded at Imarex today are known as a Straddle-strategy, representing the purchase of a put and a call with the same strike and maturity – strike was USD 15 500 for Q3 2006.
The premium paid by the buyers was US$2100, which means that the buyer earns at anything over US$17 600 per day and below US$13 400 per day. The seller hopes that this Q3 contract settels at or around the strike.
The sellers of the options are effectively betting on a Panamax market for Q3 between US$13 400 and US$17 600 per day on average, whilst the buyer is betting on an average market at over US$17 600 or under US$13 400 per day.
"With such effective clearing from NOS, we expect more of these trades now, both in dry bulk and tankers," concludes Haarr.
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