Even if the unscheduled outages caused by Brazil and Libya and were to increase somewhat in the short term - according to EIA estimates, they already totaled 3.7 million barrels in September, which was their highest level since 2010 - supply remains more than ample on the oil market.
As a result we could foresee weakness in crude prices which in turn was struggling to hold onto resistance at 48.10 levels.
Light Sweet Crude Oil (WTI) futures and options are the world's most actively traded energy product. WTI plays an important role in managing risk in the energy sector worldwide because the contract has the most liquidity and most transparency.
So from current levels keeping speculation mindset we recommend shorting near month futures for target towards $46.50 levels again, however short term traders keep a strict stop loss at 48.50 levels. Thereby, we have attractive risk reward ratio.
If puts are overpriced relative to calls, the arbitrager would sell a naked put and offset it by buying a synthetic puts. Similarly, vice versa when you think calls are getting overpriced in relation to puts.
Arbitration can also be possible through box spreads where buying debit call spreads and debit put spreads for a risk-free returns.
The opportunity for arbitrage in options market exists once in blue moon for individual investors as price discrepancies often appear only for a few moments.
