Where is the volatility

06 June 2007

Volatility continues to desert the market and options sellers will be very happy. Could Summer change this?

This time last year the prices of power and gas were all over the place as sellers withheld moving their commodity into the market and buyers seeing small drops would enter the market with the intention of buying for storage. No one predicted that over three- five months, prices would continue to fall and then suddenly reach a floor in March 07 which would see limited buying activity in Apr and May and no real sustained direction. Sellers of options will be laughing at the listless way the market is performing, particularly after such a volatile period as premiums will be exorbitant from history.


Volatility 

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