Options Traders Bet January Oil to Drop Below $50, $40 a Barrel

By Margot Habiby

Nov. 25 (Bloomberg) -- Oil traders placed bets that January crude will fall below $50, $45 and $40 a barrel as futures dropped for the first time in three days.

January $50 puts rose $1.47 to settle at $3.71 a barrel, or $3,710 a contract, at 4:15 p.m. on the New York Mercantile Exchange, according to data compiled by Bloomberg. The options contract was the most active on the exchange, trading 2,042 lots, down from 3,125 yesterday.

Crude oil for January delivery dropped $3.73, or 6.8 percent, to $50.77 a barrel at 2:42 p.m. on the exchange. Futures fell on speculation that a U.S. Energy Department report tomorrow will show that inventories climbed for a ninth week as demand declined.

January $45 puts added 83 cents to $1.75 a barrel, or $1,750 a contract. Volume was 785 contracts, down from 1,206 yesterday. Open interest was 10,456 lots yesterday, up from 10,090 on Nov. 21.

January $40 puts increased 38 cents to 66 cents, or $660 a contract, on volume of 442 lots. Open interest was 12,184 yesterday, compared with 11,707 on Nov. 21.

Open interest on the January $50 puts was 11,077 yesterday, up from 12,287 on Nov. 21.

One options contract equals 1,000 barrels of oil.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.