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EU Carbon Options Trade With 50 Euro Strike Price (Update2)
2010-09-02 17:36:07.47 GMT
(Updates prices in fourth paragraph.)
By Catherine Airlie
Sept. 2 (Bloomberg) -- Options to buy European Union carbon
permits for 2012 traded in London yesterday with a strike price
of as much as 50 euros a metric ton, CarbonDesk Ltd. said.
Some 1,000 lots of call options, which carry the right to
buy permits at a given price, traded at 50 euros ($64), 2,000
lots at 40 euros, and 1,000 lots at 30 euros, London-based
CarbonDesk said today in a research note.
Investors may have used a "butterfly strategy," the
research note said. Similar patterns emerged twice last month,
with the higher strike price at 40 euros a metric ton, Pola
Kurczych, a strategist at CarbonDesk, said by e-mail today.
"Trades at such high strike levels into 2012 are not
uncommon," Kurczych said.
The call option at a 50-euro strike sold at a premium of 21
euro cents a metric ton, while the option at a 30 euro strike
sold at 83 cents, CarbonDesk said.
A butterfly spread combines three options with the same
expiration date and different strike prices, with half of the
contracts bought or sold at the middle strike price and the rest
divided among the top and bottom. The butterfly takes its name
from the strategy's payout diagram, which resemble the insect's
outstretched wings.
EU carbon permits for December rose 2.5 percent to 15.78
euros a metric ton on London's European Climate Exchange. That's
the highest close since June 21.
EU permits tend to move in the same direction as United
Nations carbon credits because both can be used by European
factories and power stations to meet emissions limits.
United Nations offsets rose 3.3 percent to 13.92 euros a
metric ton, the highest close since May 6, after the executive
board of the Clean Development Mechanism moved ahead on a five-
year-old plan to work with auditors to reduce the supply of
credits. The measure, published on its website today, will be
considered at the next meeting this month.
For Related News and Information:
Emission market news NI ENVMARKET <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
--Editors: Mike Anderson.
To contact the reporters on this story:
Catherine Airlie in London at +44-20-7073-3308 or
cairlie@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
