When you have options, volatility is your friend
The jumpier prices are, the more valuable is a right to buy or sell
IMAGINE THAT, by some twist of fate, you become the ruler of an oil-rich state. A crash in the oil price has left a hole in its budget. You are forced to consider selling the kingdom’s assets. Among them is a mothballed oilfield in a remote part of the country—so remote that it costs $90 to retrieve each barrel of oil. That is above the prevailing price of $70 a barrel. Even so, you are advised to try to sell a licence to operate the field.
This article appeared in the Finance & economics section of the print edition under the headline “The rub of the VIX”
Finance & economics May 11th 2019
- America ratchets up the pressure in its trade war with China
- So far, Donald Trump’s trade war has not derailed the global economy
- The EU tries to strong-arm Switzerland into a new trade deal
- Months after IL&FS collapsed, India’s markets are on a strong run
- Mobile money comes to Nigeria
- New research traces the intricate links between policy and politics
- When you have options, volatility is your friend
- The state of America’s community banks
From the May 11th 2019 edition
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