Options and Derivatives
Options for betting on price increases; they reflect upside bias in implied volatility.
What are calls/call skews?
WTI / TI
What is West Texas Intermediate?
Outright price of crude or product.
What is the flat price?
VLCC
What is a Very Large Crude Carrier?
Independent refiners in China (Shandong).
What are teapots?
Options betting on price decreases; it reflects downside protection cost.
What is Put/Put Skew?
WTL
What is West Texas Light?
Time spreads for future delivery months.
What are deferred spreads?
Afras / Aframaxes
What are smaller tankers?
SOE's.
What are State Owned Enterprises?
Options strategy involving three strikes; e.g., butterfly spreads.
What is Fly?
Description for low sulfur content in crude, typically less than 0.5%
What is sweet?
Futures price shape across time.
What are curves?
LRs / LR1 / LR2
What are Long-range product tankers?
M100
What is Russian fuel oil exported to China?
Over-the-counter derivatives or the traders who provide them.
Swap/Swap dealer(s)
Description for high sulfur crude, typically 1% or more.
Sour
Jet crack vs diesel crack; measures jet strength.
What is regrade?
MR
What are Medium Range Product Tankers?
Domestic Chinese crude benchmarks vs international prices.
What is Shanghai vs Brent?
timing of fund rebalancing based on volatility.
A major global benchmark for crude oil, representing light, sweet petroleum extracted from the North Sea.
What is Brent?
Official Selling Prices set by national oil companies.
What are OSP's
Standardized freight rate benchmark.
What are WS/ Worldscales?
When producers consume their own crude for power or products.
What is/are crude burn(s)?